On the Level: What Sectors Look Good? Beat the Crowd to Insurers

Where will the crowd run next and how can you get yourself there ahead of it?

That, it seems to me, is the central question facing investors today. This is the kind of thinking that, for years, contributed to the outperformance achieved by George Soros, Stan Druckenmiller and others at the Quantum Fund. They were masters at dashing up the road a few miles, waiting for the crowd and then selling the crowd their positions at higher prices. So let's take a crack at trying to divine where the crowd is likely to surge.

First off, the crowd is likely to keep surging out of high-priced stocks and into lower-priced stocks. It may be a cold day in hell before people once again pay 600 times next year's earnings for a company growing at 100% with an unproven business model and technology subject to competition.

What hasn't been working are the high-priced growth stocks. What has been working are value stocks -- consistent earners selling at lower multiples. ...