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2009 Investment Strategy

Fixed Income

§ Continue to rely on insured Certificates of Deposits
· Eliminate the credit risk aspect of fixed income investing
· CD’s are paying higher yields than Treasury Bonds
· Laddered portfolio provides reinvestment opportunities when rates begin to increase

§ When rates begin to rise, review adding Treasury Inflation Protected Securities (TIPS)

Equity

§ Gold: maintain overweight position – gold will anticipate inflation well in advance and increase in value

§ Agriculture: maintain overweight position – we always viewed Ag as a play on increased demand for Meat and Dairy in the rising middle class in the developing world; it was never a ethanol or bio-fuel issue for us. The developing world will come out of the global recession first since they are now the lenders and the G7 are the borrowers.

§ Global Infrastructure: maintain overweight position – the stimulus plans being enacted around the world will increase the earnings for the premier providers of infrastructure

§ Health Care/Biotech: maintain market weight position, but overweight Biotech within Health Care sector – the growing earnings of Biotech plus anticipated mergers with pharmaceutical companies should provide attractive returns

§ Technology/Telecommunications: move to market weight, but emphasize companies that have catalysts for growth – much of traditional tech investing relied upon companies whose products have now become commoditized; unique products and business lines will be catalysts

§ Financials: underweight, but begin to add some selected exposure – asset managers/mutual fund providers will take the place of hedge funds as investors begin to assess their portfolios; REIT’s that invest in mortgages will benefit from the government guarantees

§ Consumer Goods: continue to underweight – the housing ATM will not be available to promote spending; consumers will need to live within their means and move to a normalized level of spending

§ Energy: maintain market weight – we are likely in a trading range for oil between $35 and $80 per barrel. Energy companies will see their share prices trade in line with oil for the foreseeable future. The Chinese stimulus plan may impact oil prices faster and push them higher than current estimates.

§ Energy Efficiency and Clean Energy: initiate positions – under the proposed stimulus plan, there are incentives to promote clean energy (they will be better outlined later in 2009) and upgrades to the power grid. Also under the Energy Independence and Security Act (EISA), the government has begun awarding a series of contracts totaling $80 Billion to a range of firms involved in boosting energy efficiency.

§ Industrial Metals: maintain current positions and reevaluate once stimulus package impact becomes known – again, Chinese demand due to their stimulus package may impact share prices more than currently anticipated.

§ Utilities: market weight – there will be a trade-off here between the negative impact of rising interest rates (whenever that may be) and the positive impact of the stimulus package and the EISA, both of which will positively impact certain utilities that are involved in promoting energy efficiency and upgrading the power grid.