What's on your Christmas list this year?

Well, if I were to overweight a couple of sectors in my long term portfolio going forward, I would vote for buying into Emerging markets and Energy.

Sounds like performance chasing doesnt it? Might be. Emerging Markets and Energy have been on a tear lately - check out the best performing funds over the last couple of years - you'll see most of them fall into 2 categories - emerging markets and Energy :-).

So why am I putting my money (atleast some of it) on these two in particular?

It looks like over the past few years, the rest of the world is catching up with the US and other developed countries. We are in the process of seeing the often mentioned "Global Economy" really take shape.

In this new global economy, everybody's got a shot. Its not only the big boys that can have all the fun (read the US and other developed nations). Latin America, India, China, Eastern Europe and even Africa have joined in the party and are showing real signs of development and progress ("Real" companies making "real" profits).

IMO, over the long run, Emerging markets have a lot more room to grow and when the next opportunity presents itself, I will be adding to my EM holdings.

As far as oil goes - the falling dollar, a Republican government in the White House (at least until the next election), geopolitical tension in the middle east thats here to stay, increasing global demand, are some of the reasons oil prices will continue their upward trend over the long term.

So the next time oil prices dive a bit, I'm going to get me an energy fund :-)

Ofcourse, these "recommendations" come with the standard disclaimer - be ready for a lot of short term volatility and do not put all your investable assets into oil and emerging markets :-) These should make up only a small part of your portfolio (in my case, not more than 20 percent)

The funds in these categories that I like are

EM

VEIEX - Vanguard Emerging Markets Index (already own this one - will be adding more to it). Its low cost, diversified across the globe and has a great record (more details at Morningstar)

Energy, I am leaning towards

FSENX - Fidelity Select Energy (I dont own it yet but probably will on the next "correction" in oil prices)

Hey, for what its worth - the next time you see gas prices rise at the pump, you can find solace in the fact that at least your energy fund is doing well :-)