“You need to be a little risk averse,’’ says John Papa, an advisor with Diversified Planning Strategies in Caldwell, N.J., rattling off his main concerns — record debt limits, continued high unemployment and a lack of leadership from world governments.
Europe appears to be the tipping point in formulating investment strategies for the New Year.
White, who runs an advisory firm in Bloomfield Hills, Mich., says the best way to deal with the EU overhang is to bet against it by shorting the euro and European banks . He is placing clients with tactical fund managers who have a track record using shorting strategies .
While he couldn’t name funds, options here include ProShares Ultra Euro and ProShares Ultra MSCI EAFE , which aim to deliver double the inverse return of the euro and European stocks, respectively.
“It’s easier to make money in a down market than an up market,’’ he says.
White also favors hard asset investments that can thrive in a variety of outcomes. Should the Fed’s stimulus programs trigger inflation, he likesoil and natural gasdrilling stocks, gold and silvermining companies and well-managed REITs.
And if Europe and the U.S. solve their debt problems, ushering in a stronger recovery, demand for oil and industrial commodities like silver should increase.