Where experts would put their money in 2009

How would you invest $10,000 in the coming year?

Each year, we pose that question to a panel of investment experts.


The selections they made late last year for 2008 mirrored an abysmal financial landscape.

The best that can be said is that the iShares Dow Jones Transportation Average exchange-traded fund suggested by Elaine Garzarelli of Garzarelli Research Inc. and the Burger King stock favored by Richard Yamarone of Argus Research Corp. each declined less than 30 percent.


In addition, the short-term bond vehicles suggested by Hugh Johnson of Johnson Illington Advisors LLC and Paul Nolte of Hinsdale Associates Inc. provided some stability for portfolios. But most other pundit picks declined 35 percent to 50 percent.

With stocks sharply lower than a year ago, the panel offers recommendations for an uncertain 2009:

* Don Phillips, managing director, Morningstar Inc.

"Stay with equities for the $10,000 because they've taken an unprecedented hit and are very cheap. As they say, 'The time to invest is when there's blood in the streets.' I recommend Sequoia Fund (SEQUX), recently reopened to investors, because it has one of the best long-term track records in the fund industry."

* Richard Yamarone, chief economist, Argus Research

"Sit in cash a very long while until we see fear receding. Don't dedicate money to anything other than a safe haven. I suspect yields on 10-year Treasury notes will go considerably higher. Inflation is dormant this winter, but there are reasons to think energy prices will come back. Once the fiscal stimulus plan is announced, you'll see benefits to infrastructure stocks in electrical grid, highways, ports and airports."

* Richard Cripps, chief market strategist with Stifel Nicolaus

"The real opportunity is in stocks below $10 a share, which may not be palatable to mainstream investors. So my recommendation is ProShares Ultra Dow 30 (DDM), an ETF that will move twice as much as the Dow Jones industrial average in either direction. It has a high-quality, diversified portfolio that will double what should be an upside market."


* Elaine Garzarelli, president of Garzarelli Research

"Invest $2,000 in ProShares Ultra QQQ (QLD); $2,000 in Citigroup Inc. preferred stock M series (yielding 15 percent); $2,000 in the 40/86 Strategic Income Fund (CFD); $2,000 in General Electric Co. (GE) stock; and $2,000 in the ProShares UltraShort S&P500; Fund (SDS) to hedge 40 percent of the portfolio against stock market risk."

* Sheldon Jacobs, contributing editor of The No-Load Investor newsletter

"I have to believe 2009 will be a recovery period. Put $5,000 into PowerShares FTSE RAFI US 1000 (PRF), same as 2008. Then $5,000 would go in Vanguard Total Stock Market Index Fund (VTSMX). I think 2009 is going to be a fairly good year; otherwise, I would put half in a money fund. Long term, there are bargains you have to scoop up."

* Tom Potts, president-elect of the Financial Planning Association and professor at Baylor University

"Expect to see the market recover before the economy, perhaps leading by six months to a year. Put $2,500 in a Standard & Poor's large-cap stock index; $2,000 in small-cap value; $2,500 in international; $1,000 in commodities; and $1,000 in cash. Put $1,000 into Treasury inflation-protected securities as an inflation hedge. Be careful about assuming now is the time to pour everything back in the market."


* Curt Weil, certified financial planner with Lasecke Weil Wealth Advisory Group LLC

"Buy closed-end funds of dividend-producing stocks because many trade at ridiculously low prices. Put $2,000 in Zweig Total Return Fund (ZTR), a conservative value fund; $2,000 in Calamos Convertible Opportunities & Income Fund (CHI), a convertible bond fund; $1,500 in Nuveen Equity Premium Opportunity Fund (JSN) ... $500 in Black Rock Corporate High Yield Fund (COY); and $500 in Pacholder High Yield Fund (PHF). Put the rest in cash to be fed into the funds the next six months."

* Paul Nolte, investment director, Hinsdale Associates:

"We have a shot at an OK 2009. It will probably start slow but could see a double-digit positive rate of return by year-end. Stocks such as Microsoft (MSFT), Intel (INTC), Kimberly-Clark (KMB), 3M (MMM), General Electric and Diebold (DBD) are very inexpensive. It makes sense to get them all by buying the S&P; 500."

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