Investing For Your Security

Social Security reform, market fluctuations, and inflationary pressures mean you've got to take an active role in securing your finances. Our expert panel of money managers tells you what to do with your money now.

values. You’ll get a 3% to 4% dividend yield on those stocks. They are going to deliver 10% to 12% earnings per share growth numbers and they are relatively cheap. In this environment, these companies are going to experience loan growth on the back end, as people ramp up their spending. That’s a very attractive sector, for the individual investor.

Jones: I have a couple of areas. Healthcare has not been a great sector performer, but our firm has done very well here in the last couple of years. We focus on the service providers such as HMOs and PPOs, as opposed to hospitals and the insurance companies. We also like healthcare companies with major products to be introduced within 12 months. We are very bullish on asset management companies. With Social Security reform, this is a new area of incremental growth in assets under management. We are also cautiously optimistic about the energy sector although we have no opinion as to which way energy prices are going to go. If China continues to grow and India continues to grow, the demand will be there.

Jeffries: From a fixed-income perspective, there are a couple of sectors that are attractive. One is emerging market debt, which will enable you to have a play in currencies. Secondly, I think municipal bonds are attractive. If you look at the yield curve and compare similar quality rating municipals to the Treasury curve, it’s a triple A. If you are in a 21% or higher tax bracket, you are going to benefit by being in that municipal security.

Parrish: For 2005, we think that financial services companies are going to be a good sector to be in. The good dividend yields, cheap valuation, and mergers and acquisition activity are going to be heavy in financials this year as well.

Healthcare is another sector I really like. We’re invested in some of the more prominent names like Pfizer and Eli Lilly. Those stocks are going to get a pop sooner or later because their financials are impeccable and all of them have really deep and growing pipelines.

Last but not least, there are some pockets in technology that are going to do pretty well. The services-oriented companies are going to do extremely well because they’ve lagged the hardware and software companies. Also, the equipment replacement cycle is not done yet, and technology companies are going to take advantage of that trend.

BE: Any last bit of advice that will help our readers be successful investors?

Jeffries: I’d like to really emphasize the importance of establishing an investment program early on and establishing an asset allocation. It might require working with a financial professional to determine the time horizon. Continue to dollar cost average. I believe that’s the approach to be successful over the long term.

Jones: Well, I think I’d like to say the best day to start investing is today. It’s never too early to start, even with small numbers. A basic, large, diversified mutual fund, either index fund or actively managed

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