Which Way Is Up?

Our experts discuss strategies to thrive no matter what the market brings

and Fidelity. Schwab is positioned to take advantage of not just the baby boomers who are planning for retirement but also the older generation who are living well into their 80s and are putting more and more of their money in equities.

HUGHES: I’ve got a corporate bond pick if you’ve got a good relationship with a broker-dealer or want to go through Schwab. On the corporate side, it was nice to hear Nathaniel talk about Lehman Brothers. We have actually used quite a bit on the bond side in many of our portfolios.

What’s your feeling on bond mutual funds?
BE: There seem to be two schools on bond funds. There are some that don’t like them because the whole portfolio moves m one direction with interest rates. And there are some people who say leave it up to a professional.

HUGHES: Well, I guess I am being just a little circumspect in terms of thinking about bond mutual funds. For one, expenses can run as high as 2% on a bond fund. If you’re talking about bonds that are yielding 5%, maybe 6%, to begin with, and if you’re taking off 2% for whatever– diversification, administration–I think that’s a pretty steep cut. So, for bonds, I’d suggest that individuals should steer away from mutual funds.

BARBARA BOWLES’ PICKS
Pittston Brinks (NYSE: PZB): A security company that makes alarms and protects ATMs. Earnings are growing at 15% and the P/E is 16.
Illinois Central (NYSE: IC): Railroad offers 10% growth at a cheap P/E. It boasts strong management, and could be a take out candidate. Stock sells at a low P/E and yields at beefy 2.5%.
Med Partners (NYSE: MDM): Healthcare company that is growing at 20% but sells at a modest P/E of 18.

FRANKIE HUGHES’ ADVICE
With the yield curve almost flat, Treasury bond investors aren’t going to pick up much incremental yield for incurring the risk of longer- maturing bonds. Currently, it’s best not to opt for maturities past five years, unless you have a specific goal that you’re saving for, such as tuition or retirement. You might also consider inflation indexed bonds. For investors who want to dip into corporate debt, Lehman Brothers looks like a good bet.

NATHANIEL CARTER’S PICKS
Kmart (NYSE: KM): This turnaround retailer is setting things straight, tidying up stores and focusing on its core business. Stock could jump from $12.50 to $20 a share.
John Deere (NYSE: DE): An agricultural equipment maker that’s tapped into overseas markets, yet trades at a modest 13 times earnings.
American Express (NYSE: AXP)/Lehman (NYSE: LEH): Amex has a great travel franchise, and is starting to regain ground in credit cards. The premier bond firm on WAll Street, Lehman’s cheap and could be bought out.

DAWNA EDWARDS’ PICKS
First Data Corp (NYSE: FDC): A top financial transaction processor growing at 18%.
General Electric (NYSE: GE): The largest of the large cap stocks is growing at a robust 14%. Management’s keeping an eye on costs and is sitting on $7 billion in cash.
General Nutrition (Nasdaq: GNCI): This health food empire has the

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