Top Takes From RealMoney

The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and (if applicable) how they played those ideas.

1. Start of Stagflation? Favorites

By Robert Marcin
9:23 a.m. EST

Inflation a wee bit warmer than expected, and housing starts much softer. Nascent stagflation? Although not reflected in the roaring equity markets, at the margin, economic news is rolling back over. I continue to avoid the housing-related, consumer discretionary, financial, and deep cyclical parts of the stock market.

Favorite short by far is the equal-weighted retail ETFs that are approaching their 2007 levels. With my forecast for tepid consumption growth, this 20-plus P/E sector seems way overvalued.

A favorite long sector of the market remains medical devices. Medtronic(MDT) is my chosen long position. It's very cheap, and it has an excellent pipeline with leading market share positions. New product introductions and foreign growth might get revenue growth up to double digits in 2010. A 16 P/E on 2010 calendar estimates generates a 40% return. The chart looks like it's just getting started.

As the market starts to temper its gains, stock selection might become more relevant. High-quality stocks with decent growth and modest valuations still offer reasonable upside.

Positions: Long MDT

2. Bullard Waiting for the End of the World

By Tom Graff
9:50 a.m. EST

If the Mayans are right and the world ends in 2012, we may never get a Fed rate hike. In a presentation released today, St. Louis Fed President Bullard points out (on page 22) that in the last two recessions, the Fed hasn't hiked rates until 2.5 to three years after the recession ended. That would put us into 2012.