Get Your Portfolio In Shape For a Long, Hot Summer

For investors, this summer is going to be anything but a day at the beach.

With skyrocketing oil prices, the continued threat of  recession, and no end in sight to the housing slump, investment pros are expecting a rough time for the markets. A stock rally? Not likely.

AP

Still, that doesn't mean you should bury your head in the sand. Investment advisers say there are plenty of opportunities not only in stocks but bonds and commodities.

Here, then, are some tips to get your portfolio in shape for the summer.

Stocks

Outside of Dow transports, playing index funds, at least to the long side, could be a little risky. Analysts think there's not much reason to bet on a sharp move upwards.

"It helps me if the market goes up, but there's no reason to buy stocks right here," says Dave Rovelli, managing director of US equity trading at Canaccord Adams in Boston. "If we see light at the end of the tunnel then I would say start chipping away. But with oil at $134, $135 a barrel now, I think it's just too scary."

For the time being Rovelli is keeping his money in cash--a money market account to be specific, which speaks to how much reticence there is towards playing stocks under current conditions.

The biggest opportunity likely will come in finding moves specifically related to the bad news hitting Wall Street lately.

Specifically, David Kotok, chairman of Cumberland Advisors, says he's long right now on ETFs for transport, and likes rail and large trucking companies, which he says are chewing up their smaller competitors because they can more easily withstand the surging gasoline costs.

CSX has been an especially popular choice among rail companies, which analysts say will benefit as carrier services reliant on fuel to transport their goods suffer.

Technology also is a popular choice going forward as a sector not as heavily influenced by rising fuel costs.

Nadav Baum, managing director of investments at BPU Investment Management in Pittsburgh, thinks cutting-edge companies such as Blackberry-maker Research in Motion and Apple will prosper. Baum also is sticking with his strategy towards financials like Bank of America and JP Morgan Chase that may have lackluster earnings ahead but pay handsome dividends.

"It's going to continue to be tumultuous, but for those that have that long-term horizon there are some great buys out there," Baum says. "The volatility is going to come back in the summer and right now when you look at it there's no catalyst for the market to move higher."

In the meantime, consumer-staple health care companies are attractive to John Massey, senior vice president and portfolio manager at AIG SunAmerica Asset Management, who recommends pharmacy chain CVS and Dow stalwart Procter & Gamble .

"We continue to be invested in some of the defensive areas because we're still a little bit worried about the consumer," Massey says.

Emerging markets get the nod from Bruce Fenton, president of Atlantic Financial, who advises ETF plays on growth in the Middle East. SPDR offers the S&P Emerging Middle East and Africa fund based on equity markets in the two regions.

"In my opinion it is by far the most underlooked story but it's one of the great growth stories of our lifetimes," Fenton says of the MidEast.

CONTINUED : Commodities and Bonds, Volatility and Volume

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