Roller-Coaster Ride

Our panel of experts review today's volatile market. Strap yourself in and get prepared for a bumpy trip.

are some great opportunities. Kmart (NYSE: KM) is a stock that’s trading at seven bucks now. Five or six years ago, the stock was close to $50 and it’s been a tough road down. But they’ve made some changes in terms of focusing on a better merchandising mix, fixing up their stores, [and] they’ve got a new CEO. We think there’s virtually no downside of the stock at that level.

We like some of the utilities, the Texas utilities and the Duke energies, the big names that are consolidating the industry. We own PepsiCo (NYSE: PEP), and PepsiCo has had a good run of late. Once they sold off or spun off Tricon (NYSE: YUM), that got them to focus more on the soda side of the business domestically, which has not been as strong as their international operations; and also the Frito-Lay aspect of their business is clearly huge.

There’s going to come a time when only tech is going to be in growth because traditional consumer staple food names, the McDonalds and the Cokes, and pharmaceutical stocks are gradually migrating over into the value realm. They’re trading at discounts to the market.

B.E.: What advice would you give to retail investors in terms of how to approach today’s market?

HUMPHREY: I tend to think if you’re going to get into the market, you should first try to get into something you understand, try to own companies that you kind of understand and take a long-term horizon. Don’t expect to get rich overnight. That means don’t try to chase the latest momentum trends. I tend to like the usual suspects, the big, dominant-type companies, because I think if you own a bunch of them, they consistently make their numbers. . . . periodically, you’ll get one that will blow up, but most of them tend to keep you in the hunt and give you a decent return over time.

KELLEY-WATKINS: When I think about novices attempting to approach Wall Street, my first advice is to get professional advice. That can take the form of just outright brokers or money managers like people here at this table. That’s probably your best thing. When you go to buy a house, you study it and you know what you buy. You also went, in most cases, with a real estate agent. So take a professional with you as you begin this walk.

CARTER: I would just say that diversity is the key thing. I think you need to look at small cap, large cap, international, growth, and value and all of those things. For a novice person, I think just getting in the market is the most important thing. I think one way to do that, a low risk way, would be to buy an index fund. [It’s] a cheap way, which gives you diversity and gives you 500 stocks, and use that as a basis to start to understand the market and then maybe go out and buy an individual stock on your own. That will get you acclimated

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