On Wall Street, 2001 so far has been filled with economical turmoil, a roller coaster market, rate cuts, thousands of layoffs, and talk of tax cuts. Is there any hope of making money?
Fox News Channel's Brenda Buttner talked to Al Gobo, a financial planner with US Financial Services.
Q: It's hard to watch this market without wanting to take action, but you don't want to just sell?
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Gobo: Without a doubt. I think number one you need to differentiate whether you're an investor or a trader. An investor typically has long-term goals where traders are typically much shorter-term.
Q: More than a couple of months?
Gobo: More than a couple of weeks or even a couple of years. I think the long-term investor creates some type of portfolio with certain criteria in mind. It is put together and an investor tries to maintain the integrity of that portfolio. I think that's where you make money today.
In plain English, let's pretend your portfolio has 20% stocks and 80% bonds. The market changes and now it looks like 85% stocks, 15% bonds. Maintaining the integrity means we reallocate. And buy more bonds in that case.
Q: Even though all of that was thrown out during the tech craze?
Gobo: We threw out a lot of good rational thought in 1998 and 99. But all you had to do was throw a dart somewhere and you made money. I think diversifying makes sense.
Brenda: You like financials and technology, you are a brave man.
Gobo: Yeah, absolutely. Going forward demographically speaking you look at financials, you look at technology, at health and science. And if you want to get outside of the U.S., look at Asia. But don't spend too much time in Japan.
Q: You like mutual funds, you tailor them to each client.
Gobo: Yeah, and most clients like mutual funds because they get the biggest bang for the buck and get professional management. They could go into a fund and buy 150 different stocks. So if they go into something like financial, I like Davis Financial and it is a well-performing fund. By going into a fund like that, you buy City Corp and American Express and all the big names.
Q: You also like Fidelity Select Electronics?
Gobo: Yes, in its best year in 1999 it was up over 100 percent. Last year it took a little bit of a hit and it's down 17 percent. But with it you own all the big names.
Q: What did your friend tell you about not falling off?
Gobo: A good friend of mine says it's pretty hard to fall off from the floor.
Q: Funds are good because you are making a bet on the sector?
Gobo: That's correct. It is very important to not pick just one sector and bet on just one sector like most people did back in 1999. Pick a couple of sectors and you'll find out some will be up and some will be down. In general you should do very well. And over a period of time rebalance those.