My Favorite Funds for This Market

04/18/2013 7:00 am EST

Focus: ETFs

Jim Lowell

Senior Partner & Chief Investment Strategist, Adviser Investments

Economic statistics don’t always tell you the whole story, says Jim Lowell of Forbes ETF Advisor. Here, he shares his ideas for a recovering economy.

I like to watch what consumers do (i.e. spending) and not what they say. Car sales, retail sales, phone sales, tablet sales, music and movie purchasing, hotel and airline stays—you name it, consumer spending shows more confidence than confidence reports suggest.

Jobs are part of that spending-does-not-equal-confidence equation. It still feels like jobs are on shaky ground. But in March we saw the unemployment rate fall to 7.7%. Job creation was strong in toto (236,000) and in parts: professional services, construction, healthcare,and  retail each reflected strength.

True, January jobs numbers were revised lower (from 157,000 to 119,000), but December’s numbers were revised up to 219,000 from 196,000.

Overall, economic activity improved more than initially forecast. The end-of-month revision to the fourth-quarter GDP, up from 0.1% to 0.4% on the back of stronger-than-expected business spending, helps ground the foundation upon which 2013’s growth is being built: the foundation was stronger than expected.

Questions remain about the kind and quality of the jobs being created, the overall economy’s ability to maintain even the slow pace of this job recovery, and whether the market top is a bull-market milestone or a bear trap.

But I continue to answer those questions with facts on the ground, rather than conjectures from broadcast towers. So if from on high, things are looking down, from the ground I’d say things are still looking up.

Here are some of my Best Buys:

Tactical Opportunities: Powershares Dynamic Basic Materials (PYZ) for a bet on recovery. SPDR S&P Homebuilders (XHB) for a bet on housing’s recovery. Floating Rate High Income (FFRHX) for defense against retreats and/or advances.

Aggressive Growth: SPDR S&P 600 Small Cap (SLY). SPDR S&P Homebuilders (XHB). Floating Rate High Income (FFRHX).

Growth & Income: iShares S&P Global Telecommunications (IXP) for growth at a reasonable price. Floating Rate High Income (FFRHX).

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