With the current high levels of market and economic uncertainty, Oliver Pursche believes it’s crucial to stabilize returns with high quality, dividend-paying stocks. In today’s interview, he tells MoneyShow.com’s Kate Stalter about some of his favorites.
Kate Stalter: Today, we are speaking with Oliver Pursche of Gary Goldberg Financial Services in Suffern, New York. Thanks very much, Oliver, for joining us today.
Oliver Pursche: My pleasure Kate.
Kate Stalter: Tell us what your view is on the current market situation, and what you believe is important for individual investors to be aware of right now.
Oliver Pursche: Sure. We have been talking about this pretty consistently for the last year or so. We think that as a whole, 2011 is going to be a slow growth year.
However, the stock market and commodity market should perform pretty well. Despite all of the troubles and headwinds, whether it be the European sovereign debt crisis, the debt ceiling here in the United States and ongoing debate about fixing the tax code entitlements, and so on and so forth, corporate earnings are very strong and they are continuing to be strong.
We think that in particular the second half of the year, the fourth quarter, is going to do very well. We expect an 8% to 10% rise in the S&P 500 for the year, and a 10% to 14% rise in commodity prices across the board, in particular agriculture and energy.
Kate Stalter: You led into the next thing I wanted to ask you about: What are some of the sectors, or global regions, or asset classes that you see as being in favor right now?
Oliver Pursche: We at Gary Goldberg Financial Services are strong believers in high-quality, high-dividend-paying stocks. So you are talking about some of the consumer-staples stocks, some of the energy stocks.
Names like Unilever (UL), Novartis (NVS), McDonald’s (MCD). Even Intel (INTC) is a great name for investors to take a look at, because it pays such a strong dividend now, and it is not necessarily something that you think about.
We are broadly diversified, and I think that is very, very important for investors. You want to be diversified. You don’t want to have too much exposure to any one sector, and that is primarily to lower the volatility in the portfolio. And of course, keep some cash on hand.
And don’t be afraid of short-term bonds. They should be pretty well insulated from any kind of potential interest-rate volatility, in particular if you are dealing with Treasuries.
|pagebreak|Kate Stalter: So what sectors or asset classes do you think people should make sure they avoid for the time being?
Oliver Pursche: We haven’t liked and still don’t like financials. We think the banks, with all the changes and regulations that are coming through, are going to have a very difficult time, and are going to have to change their business models. So that is our least favored arena, and the area that we would really avoid.
Secondly, we would also avoid long-term bonds. Think of it this way, Kate: We just talked about dividend-paying stocks. There are lots of stocks that are large-cap companies with very strong balance sheets that are paying a dividend yield over 3.5%. The ten-year treasury is paying just under 3% right now.
So again, if you are looking for yield and safety, I think companies like McDonald’s, like Lockheed Martin (LMT), and Exelon (EXC) are potentially very, very attractive for investors, especially when you incorporate the dividend yields.
Kate Stalter: You have just named a number of these dividend-paying stocks. Are there any other investment vehicles that you are turning to these days to meet your clients’ objectives?
Oliver Pursche: Yes, absolutely. We like ETFs. Now, ETFs are not all created equal, and people have to be careful. But if you are looking to gain some exposure to, for example, silver or gold or platinum or palladium, there are physical metal ETFs out there that people can invest with.
The iShares Gold Trust (IAU) is one that we use for gold. The iShares Silver Trust (SLV) is one that we use for silver. And then, of course, there are some more complex vehicles out there that we utilize, in terms of exchange traded notes and exchange traded funds that invest in agricultural commodities.
That gets a little bit trickier and I would certainly urge any investor to go on our Web site, www.GGFVEST.com, to read a little bit more about what to look out for. Or consult with your financial advisor, because I think that you are getting into an area there where the instruments are very complex, and you want to be careful.
Kate Stalter: Any other additional stocks or funds that perhaps didn’t come up that you believe investors might take a look at right now?
Oliver Pursche: Well, you know, we are firm believers at Gary Goldberg Financial Services in sticking with the safer investment vehicle within each asset class, so whether you are buying a small-cap mutual fund or small-cap ETF, large cap, a commodity, go with the one that is the most consistent. Go with the one that has a reasonable track record and takes on the least amount of risk.
If your bet on commodities is right, the difference between the top fund and bottom funds is minimal, so having the safer option insulates you on the downside. It is all about protecting your principal in this type of environment.
You want to lean on the side of caution. There are enough economic headwinds out there that that is absolutely important, in our view.
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