Even after the Federal Reserve cut its key federal funds rate to 3 percent, investors can likely expect more market volatility ahead.
CNBC asked the pros how to protect your portfolios.
Eye 'Early-Cycle' Stocks
“You want to buy the early cyclical names, the asset-incentive truckers and rails and even UPS and FedEx when things are at their bleakest. Big fix cost networks and you want to buy them when fundamentals are bottoming out because people will start putting money into these names before the economy starts to show some signs of improvement.”
John Barnes, BB&T Capital Markets
Buy Beaten-Up Stocks
“We think we’re going to be in a tough economy, but coming out Cintas is a dominat player in this industry, and the company’s actually doing well right here, buying stock, about $500 million beginning in the fourth quarter. The Farmers own a lot of the company, the Farmer family. We just think it’s a great long-term value at a ten-year low in terms of valuation.”
Ted Kellner, Fiduciary Management Manager
Kellner recommends: Sprint and Cintas
(Contd.)
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Bet on Gaming
“I have optimism in gaming, but in particular, MGM [Mirage] is not only diversifying but you’re looking at a large buyer of stock. But, I also see the future of Vegas and gaming very strong and MGM is the largest there. The fact is is that in bad times, good or bad, people gamble more when it’s bad than when it’s good.”
Lawrence Klatzkin, Jefferies & Co. Casinos & Gaming Analyst
(Contd.)
Think Out One-Year
“From an investor perspective, [there are] tremendous opportunities that are in the marketplace today if you can think out one year from now in terms of return opportunity. I think not to lose sight of the fact that when we come out of a recession, the early cycle stocks are the place to go. Consumer discretionary stocks, as you know, has been absolutely crushed. The financials have been absolutely crushed. These are the names that most likely are going to lead us out of this. And, if you’ve noticed, what’s been performing the best over the last couple of weeks? Financials. Consumer discretionary.”
Wendell Perkins, Optique Capital Management