The markets have taken a beating in the past few months and chances are so has your portfolio. Predictions are the markets will remain choppy in the near future, and the question on a lot of investors' minds is what should I do now? Seeking answers, we recently talked to some top financial experts from around the country. While there's no one-size-fits-all approach, all offered solid advice well worth considering.
1) Turn Off CNBC
Watching the stock market in a free fall can send even the most experienced of investors into a panic. Bill Cram, an analyst and portfolio manager at Reed, Conner & Birdwell in Los Angeles, advises steering clear of the scary news by staying off your computer and turning off the financial news shows. "It will drive you crazy," Mr. Cram says. "You can end up making very bad long-term decisions." Instead, he says, consider looking at some high-quality stocks in which to invest. "To borrow a quote from Warren Buffet, 'When the market is greedy be fearful, and when the market is fearful be greedy','" notes Mr. Cram. "Th is is the time when you could find some great opportunities; what we're seeing is a lot of high quality, high-cap stocks trading at pretty deep discounts."
2) Shift Your Portfolio –- Look to Health Care
When the going gets rocky, look for safe havens, says Margarita Perez, president and founder of Fortaleza Asset Management Inc. in Chicago. "We're seeing the downside of tech and financials so it is a good time to upgrade your portfolio to include such things as health care and consumer staples," Ms. Perez says. "We all need health care and we all need to eat so shifting into these kinds of stocks is a solid idea." While elective health measures, such as plastic surgery, may be postponed during turbulent financial times, more basic medical services are always in demand, she says. "Plain, vanilla health care services are enjoying some nice growth right now. Th ere is always some risk, of course, but the growing and constant need for medical services gives you a safety cushion."
3) Invest in Cash
Robert Rodriguez, CEO at First Pacific Advisors Capital in Los Angeles, advises investors to maintain liquidity (cash and short-term investments) for most of the year, or until the crisis shift s into a more severe phase. "Too many smart people are trying to take advantage of the crisis and I believe they are too early," says Mr. Rodriguez. "If investors do not have liquidity or do not want to have liquidity, I would focus on high-quality investments." Mr. Rodriguez also advises staying away from investing in financial services companies until later this year or maybe even next year. "The consensus believes the Fed's recent lowering of interest rates will stabilize the economy and the financial services companies," Mr. Rodriguez says. "I believe this is an optimistic expectation and that the second half of this year will likely prove very challenging from an economic and credit viewpoint."
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