Mmagical Millennium Tour

Cautious optimism guides this year's journey into investments and the economy

and buy Treasuries. Mutual funds might be hit with redemptions, further depressing prices. After those problems are behind us, there may be good values in the junk bond market. The same is true for emerging-markets bonds, too.”

In general, junk bonds and emerging-markets bonds work best if they’re held in a tax-deferred retirement account. Why? If you’re stretching for yield in emerging-market and junk bonds, the interest you receive is fully taxable. By holding individual junk and overseas bonds in a tax-deferred retirement plan, that interest won’t be taxed. Bolton says that investors who hold bonds in a taxable account have “no choice” but to hold municipal issues because their tax-exempt yields can be higher than the after-tax yields from taxable bonds.

Y2K: A WHIMPER, NOT A BANG
Our experts are unanimous in downplaying the perils of Y2K. Burks sees the “millennium bug” as being a minor inconvenience for the most part. “Moving into the new year will be a relatively seamless experience for most people,” he says, with little impact on the financial markets.

Bolton thinks that Y2K might cause some paralysis in the financial markets in January and February. “You won’t see many people in the financial industry taking vacations in December and January,” he says, “but any disruptions may lead to buying opportunities.”

Eley expects Y2K to have even less of an impact: “By the close of business on January 3, the first business day of the year, people will see that their worst fears haven’t been realized, and they’ll go on with their lives.”

As Rodgers puts it, Y2K will be a “nonevent,” with some hoarding and large amounts of cash in circulation but no significant impact on stocks or bonds.

Going into the new year and the new millennium, you shouldn’t be ruled by fear or greed. Instead, a sensible approach to long-term wealth-building will pay off long after Y2K becomes a distant memory.

RANDALL ELEY-THE EDGAR LOMAX CO.
PREDICTIONS FOR 2000
Economy: Slowing down on its own, especially in the third quarter, with barely a hint of inflation. Thus, no Federal Reserve action should be needed.
Stocks: Chevron (NYSE: CHV), Dow Chemical (NYSE: DOW), General Motors (NYSE: GM), Sears, Roebuck & Co. (NYSE: S), Eastman Kodak (NYSE: EK) and Raytheon (NYSE: RTNa).

NAPOLEON RODGERS-ALPHA CAPITAL MANAGEMENT
PREDICTIONS FOR 2000
Economy: Brisk pace of economic expansion, with growth in the 2.5% to 3% range. Inflation should be mild, with the Consumer Price Index rising 2.4%.

Bonds: High-quality, intermediate-term issues.

PREDICTIONS FOR 2000

WHAT’S HOT
Technology Companies
Large-Cap Value Stocks
Domestic Economy
Investment-Grade Bonds

WHAT’S NOT
Y2K Glitch
Large-Cap Growth Stocks
Overseas Markets
Junk Bonds

MUTUAL BENEFIT
You’re armed with our experts’ prognostications on the economy, interest rates, and which stocks and bonds should do well in 2000. So, should you rush headlong into buying individual stocks and bonds? If you’re the kind of person who finds market drops nerve-racking, maybe you should stick with mutual funds, instead.

Going the mutual fund route is advantageous,
especially if you plan to invest in riskier shares such as small-capitalization stocks, foreign issues and real estate investment trusts (REITs), says Percy Bolton, head of Percy E. Bolton Associates

Pages: 1 2 3 4 5 6 7
ACROSS THE WEB