By Jennifer Riley
March 2001 - In the unending search for enlightenment, investors will look just about anywhere for signs of how the market will do. The past year-and-a-half has been full of conflicting messages. While the National Football Conference’s St. Louis Rams won the 2000 Super Bowl (traditionally a harbinger of a bull market), just months later the market took a dive. Maybe the writing was on the wall, though, given last winter’s lower skirt hemlines (hemlines typically go up in a bull market).
Luckily, there are financial planners to take the guesswork out of investing. Five such professionals spoke with HISPANIC BUSINESS®, offering strategies, advice, and picks for successful investing.
Jesse A. Garza, Salomon Smith Barney, San Antonio
Catering to a clientele of U.S. Hispanic and Latin American professionals averaging 50 years of age, Mr. Garza tailors investment strategies to each client’s tolerance for risk while acknowledging that retirement may be just around the corner. His goal is to achieve a balance between cash, bonds, and equity with a long-term focus.
“Most of the planning we do is long-term in scope,” Mr. Garza says. “I make it a practice to meet regularly with my clients to rediversify their portfolios on the basis of changes in their lives, changes with the Fed, or changes with the companies. We’re constantly tweaking the portfolio, with a long-term focus. We do not react emotionally and change portfolios because of short-term events.”
Mr. Garza uses Salomon Smith Barney’s Stock Rating system as a risk yardstick when advising clients. According to that system, a low-risk stock with a buy rating from the company’s research department may see returns of 15 percent in 12 to 18 months. A medium-risk stock with a buy rating may see returns between 20 percent and 25 percent. And a high-risk stock with a buy rating may have greater than 25 percent returns. Of course, all of those returns have a corresponding potential for loss. For those who can stomach the risk, Salomon Smith Barney’s speculative stocks with buy ratings may see 30 percent returns (or losses). Venture stocks come with the chance of even greater gains or losses but would be implemented only in “extremely well-diversified portfolios,” according to Mr. Garza.
“There seems to be great risk attached to stocks,” he says. “You’re at the mercy of one company’s performance. A mutual fund diversifies the companies and the risks. There are bond funds, sector funds, industry funds to consider. At certain entry points, most portfolios under $100,000 are better suited for mutual funds by the mere fact that they offer diversity with the guidance of fund managers. Quite frankly, if you’re going to invest in stocks, you want to have a portfolio representative of 12 sectors. Many times that means having more than $100,000 to begin.”
Company policy prevents Mr. Garza from publicly endorsing mutual funds, but he says he looks to social themes to identify sectors and specific companies with good potential. He hasn’t given up on technology and communications, despite the sectors’ poor performance of late. The information superhighway, he says, will still be a driving force in the economy. With this in mind, he is bullish on technology and data-storage company EMC (NYSE: EMC). He sees increasing demand for the company’s data-storage systems (which are compatible with any computer operating system), given the global embrace of electronic data transmission.
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