Worried about the market? Insulate your portfolio
Investment Consultant, Gary Goldberg Financial Services
“Buy American” – What was once the rallying cry of labor is also a pretty good investment strategy for today’s environment, especially for investors who need income.
You may be justifiably sick of hearing about Europe or the slow-down in China, and I will spare you the latest gory details. Most diversified portfolios have much greater exposure to Europe and the emerging markets than most investors realize. So, turning off the noise, even momentarily, doesn’t do anything to abate fears or the potential about what further deterioration of the world’s economies might do to your portfolio.
One unbelievably simple way to insulate yourself from events “over there,” is to buy or bulk up on shares that generate most of their revenue here in the good old U.S. of A. Some examples appear in the chart below. An exception to this thesis is CCI (notably, the “I” in CCI stands for international). Crown Communications own cell towers in the U.S., Puerto Rico (technically the U.S.) and Australia – a country / continent that has weathered the economic storm quite well and does not appear to be affected by the goings-on in Europe.
Our proprietary Dividend Buster Program owns many of these names, and is focused on companies that have strong balance sheets and a history of raising their dividend. Both of which we believe are critical to building a long-term income generating portfolio. In spite of the recent rise in interest rates, I believe low, low rates are here for the balance of this decade.
In fact, as portfolio managers, we no longer view bonds as a vehicle for generating income, but instead as a tool for lowering volatility. As such, if you need income, you should consider high quality dividend paying stocks. But recognize that not all dividend paying stocks are created equally and could be riskier than you expect, especially if you don’t do your homework. Without question, there’s more risk moving capital from debt to equities, but the current interest rate environment may make this assumption of risk a necessity, especially if inflation rears its’ head.
If you would like to learn more about our approach to building and repairing portfolios give me a call at 800-433-0323.
Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2900 ext. 247 or [email protected]
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