How would you invest $10,000 in the coming year?
Each year, we ask a panel of investment experts that question.
Amid relentless volatility, all passed the test in 2007. The recommended portfolio mix from every participant 12 months ago produced an increase this year.
At the top, each gaining more than 20 percent, were Sam Stovall of Standard & Poor's Corp., Elaine Garzarelli of Garzarelli Research Inc. and Sheldon Jacobs of the No-Load Fund Investor newsletter.
Some of that trio's hot picks included Western Digital Corp. (WDC), L3 Communications Holdings Inc. (LLL), iShares MSCI Emerging Markets Index (EEM) and T. Rowe Price New Era Fund (PRNEX).
The only serious turkey tucked in one of their portfolios was stock of Merrill Lynch & Co. (MER), a Garzarelli selection. The brokerage giant has been singing the subprime blues, but that one fooled a lot of people.
Our pundits for a second consecutive year are spreading their bets because there are so many economic and political wild cards in the coming presidential election year.
For diversification, they are increasingly recommending exchange-traded funds, known as ETFs, which mirror various indices by holding baskets of stocks. These require transaction fees because they are traded on exchanges but have no minimum investments or redemption penalties.
From the crystal ball of new and returning experts comes advice for the mythical $10,000 in 2008:
-- Sheldon Jacobs, editor of The No-Load Investor: "I'd stick with the winners and do the same thing I did last year. Split the $10,000 between T. Rowe Price New Era Fund (PRNEX), which I think has a number of years to run yet, and PowerShares FTSE RAFI US 1000 (PRF). The market next year will be somewhat positive, but not huge."
-- Elaine Garzarelli, president of Garzarelli Research: "Put 25 percent in iShares Dow Jones Transportation Average (IYT), 25 percent in Financial Select Sector SPDR (XLF), 25 percent in iShares MSCI Emerging Markets Index (EEM) and 25 percent in Consumer Discretionary SPDR (XLY)."
-- Richard Cripps, senior managing director of EquityCompass Strategies for Stifel, Nicolaus: "My stock selection for the $10,000 is stock of Men's Wearhouse (MW), which has benefited from the consolidating men's apparel sector. Over the long term, it will strengthen its position in the men's apparel and tuxedo rental businesses, improving profitability."
-- Don Phillips, managing director of Morningstar Inc.: "Put the $10,000 in Selected American Shares D (SLADX), a mutual fund run by Chris Davis and Ken Feinberg. Financial stocks have really been beaten up in 2007, and these managers are savvy when it comes to investing in them. The time to invest is when there is blood in the streets. This fund is low cost and efficient, and its managers have a lot of their own money in it."
-- Richard Yamarone, chief economist for Argus Research Corp.: "My first choice would be to invest the money in commodities, meaning everything from energy to copper, corn and wheat. For those interested in stocks and not commodities futures, I suggested consumer-related stocks such as restaurants. Spread the money between Chipotle Mexican Grill Inc. (CMG), Burger King Corp. (BKC) and Cheesecake Factory Inc. (CAKE), all recommended by our restaurant analyst John Staszak."
-- Hugh Johnson, chairman, Johnson Illington Advisors LLC: "Put $5,000 in the stock market and $5,000 in the bond market. For stocks, use either a good, actively managed mutual fund or an index fund mirroring the S&P 500, S&P 1500 or Russell 3000. For bonds, use a fixed-income ETF mirroring a five- to seven-year Treasury. If economic forecasts are close, it will be a positive stock market year, but returns will be between 6 and 8 percent."
-- Mark Johannessen, president-elect, Financial Planning Association, and managing director, Harris SBSB: "Max out your 401(k) contribution, pay off credit card debt and preserve money for future need. If that's done, buy $3,000 of an intermediate-term, high-quality corporate or municipal bond. Buy $3,000 of a large-cap growth ETF or mutual fund. The ETF would be Vanguard Growth ETF (VUG), and the fund, Vanguard Primecap Core (VPCCX). Put $3,000 in iShares MSCI EAFE Index (EFA) and $1,000 into the commodity ETF iPath Dow Jones-AIG Commodity Index (DJP)."
-- Curt Weil, certified financial planner, Lasecke Weil Wealth Advisory Group LLC: "I'd put a third of my dough in the iShares Cohen & Steers Realty Majors ETF (ICF). Midcap growth stocks are pretty cheap and relatively underfollowed, so I'd put another one-third in iShares S&P MidCap 400 Growth Index ETF (IJK). The remaining one-third goes overseas to Driehaus International Discovery (DRIDX), a no-load fund targeting small- to midcap growth stocks."
-- Paul Nolte, investment director, Hinsdale Associates: "We're in for tough sledding the early part of next year as investors realize the economy is slowing and earnings coming down, which sets us up for a reasonably good second half. First part of the year, keep fairly liquid and defensive in short-term bonds. Second half, there could be a decent stock rally. If I had to invest the beginning of the year for the entire year, I'd put half in one-year Treasuries and split the other half between consumer and technology stocks."
Andrew Leckey is a Tribune Media Services columnist.Copyright © 2015, The Baltimore Sun