Shaky Future Rattles Investors

With uncertainty an overarching theme among investment professionals, TCBN polled a number of area experts about the coming year and asked:

1. What should investors watch for?

2. What specific stocks, bonds, mutual

funds, investment vehicles or strategies

do you recommend?

Ty Finch

Financial advisor,

Wells Fargo Advisors, LLC

What to watch for

I believe the year ahead will be a time for action. Lawmakers will need to take action to avoid the fiscal cliff. Businesses will need to look beyond near-term problems and more toward longer-term opportunities. Investors will need to recognize that a defensive investment strategy can be costly, particularly if economic momentum continues to build and the equity market moves ahead as we anticipate.

Possible investment strategies

I believe the greatest beneficiaries in 2013 should be the more cyclically sensitive sectors whose revenues and earnings have been negatively impacted by sluggish global growth. We currently recommend investors look into the consumer discretionary, technology and materials sectors as well as the telecommunications services sector for some dividend yield.

Holly Gallagher

Certified financial planner,

Horizon Financial

What to watch for

Taxes are likely going up and volatility will remain. A way to offset higher taxes is to put more money into an employer-sponsored retirement plan. Most people are way behind in saving for their future. Shoot for saving 10 percent of your paycheck into a retirement plan. At the very minimum, make sure you are deferring enough to get 100 percent of any employer match that is available.

Possible investment strategies

Turn off MSN "BS," be wary of infomercials about gold and listen to your certified financial planner!

A CFP professional is uniquely qualified to give advice on all aspects of one's finances. If you have a written plan in place that is customized to your needs, risk tolerance and time frame, you are off to a very solid start.

Rick Garner

Certified financial planner,

DGN Wealthcare Advisors, LLC

What to watch for

With 2013 approaching, stock market volatility seems to have increased. Equities rise on optimistic remarks about a fiscal cliff solution, then fall when another voice expresses pessimism, and vice versa.

In addition to this constant volatility, the market is contending with anxieties about Europe and the strong possibility of higher taxes on capital gains and dividends. Even with all the issues surrounding this fragile economy, 2013 may turn out to be a good year for stocks.

A housing comeback appears evident. Our economy won't fully recover from the 2008 downturn until the housing market does. We have strong indications that this is happening with increased improvement in sales and median home prices.

Consumer confidence continues to increase and has seen its highest mark in years. There are numerous economists who think 2013 could be a key transitional year, a step toward a more robust economy. If solid economic indicators inspire companies and consumers to spend and invest more, next year might surprise most.

Possible investment strategies

Given all the negative headlines about the economy this year, it feels like the markets should be down 10 percent. While corporate profits have nearly doubled since the financial crisis, sales have grown by just single digits. Going into 2013, investors should look for companies thriving by expanding revenue, not just cutting costs.

For those investors looking for income, look to dividend-paying stocks, as a majority of these companies have yields greater than that of 10-year treasuries.

Investors are still looking for the relative safety of short-term bonds, and with the Federal Reserve indicating that it will continue to keep short-term rates near zero, now is not the time to bet big on cash and short-term bonds. Rather, look to intermediate-term issues that can help to outpace inflation.

Finally, for investors looking and worrying about the volatility of recent years, now is the time to meet with your financial advisor to develop a long-term investment plan that is focused around each individual's unique goals – a plan that is built on the solid fundamentals of patience, discipline, and faith in the future.

Dennis Prout

Certified financial planner,

Prout Financial Design

What to watch for

This may seem obvious, but the first thing to watch for is increased taxes. A question to ask yourself is, "What am I doing about higher taxes in 2013? Should I defer more?" This means perhaps funding your 401(k) and IRA 403(b) to a greater extent in 2013.

Second, 2013 may be a better year to be defensive. What does this mean? Rather than expecting outsized returns, perhaps it means just keeping more of what you have.

Third, speak with your accountant before tax season this year. There may be some things you can do that you haven't taken advantage of in 2012 or 2013 that can benefit you financially.

Last, estate planning with a trusted attorney can be an important topic to consider. Under the current tax plan, estate taxes are scheduled to increase significantly. Proper investment vehicles will be those vehicles that can assist you tax-wise for 2013 beyond.

Mark Stackable

Senior investment officer,

The Grand View Group, Wells Fargo

What to watch for

The fundamental value of stocks is based on what they earn and the interest rate environment in which they earn. So, watch the earnings level of the S&P 500, which has a trailing 12-month level at $98.75.

Next year will the earning be higher or lower? Look at interest rates. Are they trending higher or lower? Day to day short-term volatility has always been and will always be subjected to "headline" risk. Understanding trends, facts and your personal financial goals allow you to use the inevitable daily volatility to your advantage and peace of mind.

Possible investment strategies

Secure high dividend stocks, select master limited partnerships, emerging market debt, and short-term (or laddered) municipal bonds.

To learn more, go to

Larry Avery

Financial Advisor, Advanced Financial Group and LPL Financial

What to watch for

Watch out for any movement in interest rates. Investments in bonds and bond mutual funds will suffer when they start to raise interest rates from these historic lows. Watch out for your government. Every time they start printing money, as they say in the commercial, "What's in your wallet" is worth less. Watch out for the details of whatever falls over this fiscal cliff. The devil is in the details, same with healthcare.

Possible investment strategies

I have been buying alternative investment positions that have a low correlation to the traditional stock and bond market. I like income producing non-publicly traded REITS. I like the Master Limited Partnerships now available in mutual funds with 1099 tax reporting. In traditional investments, I like emerging markets and emerging market debt.

Meghan Phillips Dykstra

Investment Advisor Representative


What to watch for

Investors need to watch for uncertainty. As politicians continue to bicker over partisan differences, the markets will be volatile. After the fiscal cliff, the next wave of uncertainty will be the debt debate. Most economic indicators are still strong. The real drag on the markets continues to be uncertainty until politicians are decisive and begin to resolve the long-term debt issues. Viable solutions to fix both the deficit and entitlement programs do exist if politicians are willing to act.

Possible investment strategies

The best strategy for an investor is to focus on a long-term view and work with a professional who helps you stick with your personalized plan. I often tell clients that we are your financial GPS keeping you on course regardless of what you might encounter.

Christopher Lamb

CIMA, CTFA and Managing Partner

Old Mission Investment Company/Old Mission Trust Company

What to watch for

For conservative investors, you need to take a cue from the bond market. We firmly believe that bond investors need to prepare for a rise in interest rates which can have an impact on bond prices and as such, need to consider defensive investment strategies. Allocating more to corporate fixed income, or dividend paying equities may turn out to be the right move for 2013 through 2015. Equity-based investors should be rewarded, and should really avoid the pitfalls of the timing of security purchases and sales. 2013 will be a choppy year based on economic growth forecasts and tax issues and don't be fooled into taking actions based on short-term fluctuations. High net worth investors should take this time to get their estate plans reviewed, taking a 'large-picture' review from the perspective of both the needs of the parents and the beneficiaries.

Possible investment strategies

From an investment perspective, holding international equities following periods of poor performance has been a rewarding strategy. Coming out of 2008 and 2009, international stocks have had marginal performance relative to the domestic markets. All markets are 'forward looking' and while many investors don't feel that things are any better internationally, markets will react well before hard and fast improvements are felt.