Have You Winterized Your Portfolio?

After today's Witch, Ghost and Free Candy Spree (also known as "Halloween"), the economic world's focus will quickly switch to two things: the presidential nomination process for the Republicans, which could yield any number of business-impacting proposals, and the impending doom of another winter. Considering that the GOP might not sort out who will take on President Obama for months, I think it's safe to say we can ignore that little process for a while, at least until it plays out some more. With the leaders in the polls changing every few weeks, it's clear that they're still sorting out what candidate they want to toss out there. As for winter, well, it seems like winter has leapfrogged fall this year. Just a few weeks ago, we still had the air conditioner on — and I live in Michigan, where it just isn't as warm and humid in September as, say, Florida. Now, the temperatures are in the 30s at times, and the furnace has had more workouts than me the past week. Add in the fact that the Northeast has already been hit with one massive snowstorm, and it's pretty clear what the world is telling us: fall sucks, and you had better get ready for winter. Well, just as we northerners winterize our cars to prepare for the different challenges that the cold, snowy months bring us, perhaps it is time for you to do the same to your investment portfolio. Here's how. Retail, retail, retail As the regular grocery-shopper in my household, I can tell you that most stores have been planning for Christmas since about August. Once the bathing suits come off the racks at retailers like Target TGT and Walmart WMT, the Christmas goods start to fill the aisles. Sure, they like to pretend that Halloween matters, or that Thanksgiving is anything other than an excuse to devour turkey and watch the Detroit Lions play football, but in reality, most stores live or die based on how they do at Christmas time. Factor in the recession, which has put a damper on retail profits, and you can feel the pressure in the air on this Christmas season. The reality is that winter-time is the bread-and-butter season for retailers. They live and die based on how well they do around Christmas. If they have a good Christmas season, they rake in the bucks. If they don't do well, they might be joining Tiny Tim in the soup line. You can use this to your advantage by buying in right before the Christmas boom. The problem is figuring out WHICH retails will boom and which will bust. Luckily, we have a few weeks before things really pick up for Christmas, buying you a little time to do due diligence on which ones make sense for your individual investment strategy. I've already listed Target and Walmart, the latter of which seems to do well no matter what the economic climate. Dollar stores could be worth looking in to, so consider Dollar Tree DLTR and Dollar General DG, among others. If things seem to be turning around, medium and higher end retailers could benefit, including Kohl's KSS and Macy's M, as well as dad's favorite Sears SHLD. Energy In the summertime, Americans suck up energy in two forms: gasoline in their cars and electricity for their air conditioners. Around my house, our electricity usage doubles (or more) every time the temperature heads north of 75 degrees. In the winter, these two dip a little, as we obviously drive less in the yucky snow, and the air conditioner earns a little quiet time. The flip side of that is our heating bills go through the roof. The biggest beneficiary of that tends to be natural gas, which is something millions of Americans use to heat their homes. Factor in the reports that say this will be one of the coldest winters in recent memory, and you've got the makings of a possible profit center. Since the government usually kicks in to cover heating bills for the extremely poor, even a recession can't keep energy usage down in the winter. Look to energy companies that have some exposure to natural gas, such as National Fuel Gas NFG and South Jersey Industries SJI. Overall markets and ETF plays A healthy winter shopping season could also make winners out of the SPDR S&P 500 ETF SPY that tracks the overall performance of the S&P 500. If the shopping season is lackluster, this could drop as well, giving some short opportunities. A strong retail season would also mean more shipping, which means more trucks on the road, which could influence gasoline prices. Depending on how you see that shaking out, you could invest in (or short) the various oil ETFs, such as iPath S&P GSCI Crude Oil Total Return OIL. Even forex traders can get in on the winterizing action. Japan has been playing China's game of weakening their own currency, trying to drive exports. If they keep that up, and the rest of the world's governments allow it, there could be some trades there that make sense. The USD/JPY trade makes a lot of sense, if the conditions are right. It's at least worth looking in to, if forex is your field.