That will happen in any sector.
Hinson: I think that the overriding theme is chasing returns. When you start talking about protecting clients, the biggest challenge is to get them out of the habit of chasing returns because if [you] don’t have a disciplined strategy, the market will punish you.
BE: What sectors should investors move their assets into in 2006?
Williams: There are several sectors that I would recommend that every client take advantage of or at least consider. One is the healthcare sector. There are going to be a lot of pros to that sector, simply because of the demographics. You have the baby boomers getting older, and we’re popping pills like drugs. We’re doing everything from having knee aches to backaches to getting face-lifts [and] butt lifts. We are the first generation of aging Americans who absolutely have no desire to look or get old. I would say look for fund families [and] fund managers who do a great job in that sector. Don’t try to pick individual stocks because it’s just too difficult. I would recommend the Alger Health Sciences Fund. They have a very good one focusing on small and midcaps. On the large-cap side, there is the Eaton Vance Worldwide Health Sciences Fund.
Another area I would say investors should add to their portfolios is international equities and international debt. I don’t recommend that clients start investing in the international arena and try to find stocks. The Oppenheimer International Bond Fund has done extremely well. The AllianceBernstein Emerging Market Debt Fund has done extremely well. I think those companies, because they are large fund families, have always had a presence in international markets.
Perry-Mason: [Investors should look at] healthcare and baby boomers. I think eyes, hips, and knees are where it’s going. Think about it. We’re getting knee replacements, hip replacements, and eye surgeries. And most of us wear glasses. I also think everyone needs international exposure.
Hinson: Technology. U.S. corporations have about $2 trillion of cash sitting on their books. When they have that much cash, typically what they will do is either [look for] acquisitions and/or upgrade their technology base to become more competitive in a global economy. So we will see technology companies do well there, notwithstanding the notion that there are still a lot of industries where technology hasn’t completely permeated the bottom line.
It’s not clear that demand is going to shrink [for oil infrastructure companies]. The refineries are 20 years old. All of this equipment has to be replaced, and oil infrastructure companies will benefit from the new equipment that has to be purchased to support demand for oil.
BE: How should our readers execute their investment strategy in today’s environment?
Bryant: You start at the end with how you want to live at the end of your life. What percent of today’s salary could you get by on? When you think about that and you get to the end number, you can work backward to find out what kind of portfolio [you need] and how