With a mythical $10,000, experts invest for '93

Andrew Leckey

December 16, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

How would you invest $10,000 in the coming year? Each year I pose that question to a diverse group of investment pundits. This time around, responses vary a bit more than usual, although most experts remain generally bullish on stocks despite ongoing market, economic and political uncertainty.

Here's the advice for that mythical 10 grand in 1993:

Steven Einhorn, chief portfolio strategist for Goldman Sachs & Co.: "I'm bullish on stocks and bonds, so I'd put $6,500 in stocks and $3,500 in long-term U.S. government bonds. Stocks are Merck & Co., Pfizer Inc., Philip Morris Cos. and Dillard Department Stores. Total returns on the S&P 500 should be 12 percent, which is good relative to 3 percent inflation and 3.5 percent cash returns. I see long-term bonds moving lower in 1993, generating double-digit returns."

Norman Fosback, president of Institute for Economic Research, Fort Lauderdale, Fla., which publishes newsletters such as Market Logic and Mutual Fund Forecaster: "Commit that $10,000 to several high-yield bond funds, the only area capable of double-digit returns. I recommend the no-load Vanguard Fixed-Income High Yield Corporate Bond Fund, T. Rowe Price High Yield Fund and Northeast Investors Trust, all less-sensitive to rising rates than higher-grade funds. While equities are generally overpriced, the small-company and biotechnology stocks should do best."

Mary Farrell, investment strategist with PaineWebber Inc.: "Quality municipal bonds with 10- to 15-year maturity are a good choice for a higher tax environment under President Clinton, so they're one-third of my $10,000. For the remainder, I like PaineWebber Dividend Growth Fund or PaineWebber Growth Fund because growth stocks are the place to be. I also like global blue-chip stocks PepsiCo Inc. and Procter & Gamble, or small firms Hanger Orthopedic Group and Littelfuse Inc."

Ross Levin, president-elect of the International Association for Financial Planning: "First, pay off short-term debt and participate in your company retirement plan. That done, stocks should outperform bonds. I'd buy 100 shares of Quest for Value Capital Fund and 200 shares of Royce Value Trust, both closed-end funds on the New York Stock Exchange. I'd put $2,500 into Nicholas Fund and $2,500 into Vanguard Fixed-Income Securities Short-Term Corporate Portfolio."

Louis Navellier, editor of the MPT Review investment letter, Incline Village, Nev.: "With $10,000, I recommend a good growth fund such as Twentieth Century Vista Investors, or any of the Janus Group funds. I expect a rally in growth stocks in mid-January as earnings are released. In stocks, I'd choose Fruit of the Loom, in underwear; Scientific-Atlanta, in electric instruments; XTRA Corp., in transportation equipment leasing; Airgas Inc., distributor of medical gases such as oxygen; and BIC Corp., pen maker."

Charles Clough, chief investment strategist for Merrill Lynch & Co.: "I'd put $6,000 in stocks, $3,000 in long-term U.S. government bonds and $1,000 in cash. I'd emphasize small- and medium-sized companies. I like Collective Bancorp Inc. and Charter One Financial, in thrifts; as well as Intel Corp., in technology; Consolidated Stores, in specialty retailing; and Health Care & Retirement, in the medical field. Bond yields should rise a quarter of a percent, nothing to cause you to sell them."

Robert Dederick, chief economist for the Northern Trust: "I'd put $6,500 into stocks, 15 percent of them foreign, since stocks will be an important part of any portfolio. Although vulnerable to further hits in the marketplace, Japan should provide good investment opportunities next year. I'd then put $3,000 in safe intermediate U.S. government bonds and the remaining $500 in cash."

John Markese, president of the American Association of Individual Investors: "Because $10,000 is limited, I'd use no-load mutual funds. If bond markets have confidence in President Clinton and long-term rates stay steady or decline, the Dow Jones industrial average could end next year at 3600 to 4000. I'd put one-third in a small-stock fund, such as Oakmark Fund; one-third in large-capitalization stocks through an index fund such as Vanguard Index 500; and one-third in international stocks through Twentieth Century International Equity Fund."

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