While many amateurs try to find their lucrative shares of the market, they may be left pondering which sectors and exchange traded funds (ETFs) the experts are putting their money into.
In a capricious market, investment gurus usually provide sage advice and tell the investor to stick the course for the long-term investment, reports Eleanor Laise for The Wall Street Journal. Market conditions are just right for a meticulous investor to shift through the rubble and find that bargain opportunity.
According to The Guru Investor, O’Shaughnessy conducted a four-decade-plus study of stock returns and strategies and says stocks could still reach new lows. Nevertheless, the values out there are too good to pass up.
John Bogle, found of Vanguard Group, has about 25% of his portfolio in stocks while David Dreman, chief investment officer of Dreman Value Management LLC, has around 70% stock allocation. It is up to personally preference and experience that has decided which investment tool has been most trustworthy. These are some of the sectors and related ETFs that the experts deemed note worthy:
- Rob Arnott, chairman of Research Affiliates LLC, thinks it’s time for investing. Mr. Arnott favors Treasury inflation-Protected Securities, or TIPS iShares Lehman TIPS Bond (TIP), a Treasury bond that is adjusted based on inflation rates. He anticipates a future increase in inflation in the next 3 to 5 years.
- Long-term investors are also looking into municipal bonds, SPDR Lehman Municipal Bond ETF (TFI), because they are usually exempt from federal, state, and local income taxes. Burton Malkiel, an economics professor at Princeton, has boosted allocations to highly rated tax-exempt bonds in his taxable account.
- Mr. Arnott also increased allocations to investment-grade corporate bonds, iShares iBoxx $ Investment Grade Corporate Bond (LQD), because of “irrationally high yields.”
- Pummeled stocks in the energy sector also look like bargains, oil and gas exploration and production companies, PowerShares Dynamic Energy Exploration And Production (PXE) would experience growth if we aren’t left in a prolonged recession.
- Mr. Bogle has restrained himself from investing too much in international stocks, but Mr. Arnott says that if emerging-market stocks, iShares MSCI Emerging Market (EEM), drop any lower then they could become “extremely interesting.”
- Jeremy Siegel, senior adviser for WisdomTree, has stated that high-yield stocks, SPDR Lehman High Yield Bond (JNK), will move together after our market crisis passes. Siegel has also increased allocations into U.S. real estate investment Trusts, or REITs, SPDR Dow Jones Wilshire REIT (RWR).
Our strategy is to put 25% of the value of your portfolio when a fund crosses above its 50-day moving average. When the fund goes up 5%, put another 25% in. Watch for the long term-trend lines, and continue to go in incrementally, until the 200-day moving average is in sight.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.