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In my most recent column, "3 ticking time bombs of 2012," I gave you my "relatively positive" timeline of macro trends for the fourth quarter.

Today I'm going to give you some picks for profiting if my estimate of the 65-35 odds in favor of a relatively optimistic macro picture for the quarter turns out to be correct, a rough guide to how to stage the implementation of those picks, and some suggestions on what to do if the quarter winds up on the 35% side of my 65-35 forecast.

I expect you to use my suggestions to mix and match with your own view of the quarter to come, and with the stocks you already own, to make up an individualized portfolio. Your goals and risk tolerance are undoubtedly different from mine, and your portfolio should reflect your parameters.

Let me start with my take on the U.S. economy for the quarter.

In the US, tech and homebuilding

In my Oct. 4 column, I wrote that the U.S. economy is a) showing signs of growth -- accelerating from very sluggish to moderately sluggish, and that b) the financial markets now assume that Washington won't really drive the country off a fiscal cliff and back into recession in 2013. "Both of those assumptions could turn out to be completely wrong, I wrote, but -- and this is a critical piece of timing -- investors aren't likely to have evidence that they're wrong until the very end of the quarter or until the beginning of 2013."

If my view of the macro background for U.S. stocks in the fourth quarter is correct, I think it's critical that you review your U.S. portfolio to make sure you have enough exposure to growth stocks so you can participate in any gains in the quarter. I suspect that a lot of investors worried themselves out of the growth sector at least once in 2012 and haven't fully restored their exposure to this sector.

image: Jim Jubak

Jim Jubak

I say this with the full realization that the Standard & Poor's 500 Index ($INX) has rallied to near a new high and that U.S. growth stocks, by and large, certainly can't be called cheap. But it looks to me like the market wants to move higher -- on expectations that may ultimately be disappointed in 2013. I think the risks are reasonable right now and support increasing your exposure to growth stocks.

I also think that you can make those risks more reasonable if you look for stocks in sectors that are likely to show strong growth even if the economy grows only modestly. That doesn't remove all downside risk, of course, but it does improve the odds that you're buying above-average growth and will get more return to the upside.

Where to look? I'd look at the technology sector, particularly at the members of what I call the Apple (AAPL) ecosystem. This group of stocks, as I'll explain in my next column, is set to participate in the extraordinarily sales numbers that will be rung up this quarter by Apple's iPhone 5. Apple certainly belongs to this group -- and the stock is a member of my Jubak's Picks portfolio. But so do Qualcomm (QCOM) and Broadcom (BRCM). I'll have more on the Apple ecosystem in a few days, but in the meantime I'll add Qualcomm to the Jubak's Picks portfolio. (See my full write-up on the stock with that pick.)

What else? Stocks in the housing sector. Housing is definitely putting in a bottom, and shares in the sector have rallied -- and are likely to continue to do so on expectations of continued acceleration in sales. I'd look here at PulteGroup (PHM), a company with bigger exposure to first-time buyers than either Toll Brothers (TOL) or Lennar (LEN). I'd also look at the stocks of suppliers to the housing industry. My favorite here is Lumber Liquidators (LL), a low-cost flooring retailer.

In China, a speculation game

Trends in the U.S. economy and market could well show some fundamentals in the fourth quarter to support rising stock prices. For China, the setting for my next group of macro trends, the fourth quarter will rest almost completely on expectations. (Just in case you needed a reminder of that, on Monday the World Bank lowered its forecast for 2012 growth in developing East Asia, which excludes Japan and India, to 7.2% from 8.3% in 2011. That would be the slowest pace since 2011. The prospects for a rally in China rest on that forecast marking the low in growth for this cycle.)

The story behind those expectations goes like this: In China, the Nov. 8 meeting of the 18th Party Congress will finally put a new generation of leaders headed by Xi Jinping in power. Speculation in the Shanghai market (before the extended and recently concluded Golden Week holiday) that the government and the People's Bank would strew new economic stimulus in the path of the incoming officials pushed up prices in a very depressed Shanghai market. I'd expect another flurry of stimulus measures after the congress itself. (For more on the nature and limits of that stimulus, see "The world's next big stock rally.")

So I suggest a three-phase approach to Chinese stocks in the fourth quarter. Phase 1 involves picking a few of the stocks that speculators jump on when they think government policy has shifted toward stimulus and growth. Many of these names trade mostly overseas, but you can also buy them in New York -- Jiangxi Copper (JIXAY), the big property developers such as China Overseas Land and Investment (CAOVY), Aluminum Corporation of China (ACH), China Coal Energy (CCOZY), Baidu (BIDU) and PetroChina (PTR). I don't like any of those on the fundamentals or for anything other than the earliest stage of a speculative move after the end of last week's Golden Week holiday.

Do you want to play in Phase 1? The speculative move, if it comes, could be extremely strong. The last time China's stocks were as cheap as they are now was in 2008. And from there, stocks rallied by 83% in a year.

If you say that things were totally different in 2008, when a huge and hugely effective stimulus package pulled China from the depths of the financial crisis, you'd be completely right. And I do have doubts about the ability of the more-limited stimulus effort of 2012 to provide anything like the acceleration in growth that followed the 2008 package. But I believe that -- in the short term -- this may not matter. Speculative belief that we're looking at a replay of 2008 could well make the "facts" of the current stimulus package irrelevant.

Personally, I think the lack of fundamental evidence and the purely speculative nature of a potential rally make Phase 1 too risky for more than a dabble or two. Especially since I'm not sure I'll know when to run, not walk, to the exit.

That leaves me much more interested in Phase 2. In Phase 2, the expectations of faster growth in China expand the rally to the domestic sector, where Chinese companies stand a good chance of delivering fundamental growth. For example, shares of Home Inns and Hotels Management (HMIN) popped on reports that the Golden Week holiday showed a surge in travel. China's 119 major scenic destinations saw 34.3 million visitors, up 21% from last year's holiday. Tourism spending climbed by nearly 25%. In Phase 2, I'd add stocks like Home Inns and Hotels, already a member of my Jubak's Picks portfolio, that will benefit from increases in consumer spending resulting from any pickup in growth and the promise of a hefty 13% annual increase in the minimum wage under the latest five-year plan. Other possible Phase 2 stocks include Café de Coral (CFCGF), Yum Brands (YUM), Tencent (TCEHY), Ping An Insurance (PNGAY) and Tingyi (TCYMY).

A rally in China on expectations of increased stimulus and accelerating growth would lift all global boats, especially those of companies that export raw materials to China. In Phase 3 of any China rally, I'd look to shares of commodity producers such as Vale (VALE) and Freeport-McMoRan Copper & Gold (FCX), a member of my Jubak Picks portfolio.

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