Monday, February 2, 2009

What are the 'experts' investing in right now?

Where are the investing world’s gliterati investing in today’s financial climate.’s Eleanor Laise, has written a timely article. Here is an organized run-down of all the participants’ investments:

Robert Arnott, Research Affiliates “I think this is a marvelous time to be investing,” says Rob Arnott, the 54-year-old chairman of Research Affiliates LLC, an investment-management firm in Newport Beach, Calif. “There are more interesting opportunities out there now than any of today’s investors have ever seen.” “Certain parts of the bond market are priced for a scenario that’s worse than the Great Depression.” One favored area is Treasury Inflation-Protected Securities, or TIPS, (Real Return Bonds in Canada) a type of Treasury bond whose principal is adjusted based on changes in the inflation rate. Ten-year Treasurys currently yield only about 0.9 percentage point more than 10-year TIPS, indicating that investors believe inflation will remain quite low in the coming years. Mr. Arnott says he boosted his TIPS allocation “in a very big way” in his personal taxable account toward the end of last year because he expects a substantial increase in inflation in the next three to five years. Mr. Arnott boosted his allocation to investment-grade corporate bonds in his personal taxable account late last year because the market had reached “irrationally high yields,” he says. Other experts say that emerging-markets stocks, which were hit especially hard last year, are starting to look tempting. If these shares take another dip, they could become “extremely interesting,” Mr. Arnott says.

John Bogle, Vanguard Funds - Tax Exempt Municipal Bonds“I earn my money and spend my money in dollars, and I don’t need to take currency risk.” Municipal bonds also look attractive to many longtime investors. Munis are typically exempt from federal and, in many cases, state and local income taxes. Many are now yielding substantially more than comparable Treasury bonds. In his taxable account, Mr. Bogle holds two muni-bond funds: Vanguard Limited-Term Tax-Exempt and Vanguard Intermediate-Term Tax-Exempt.

Burton Malkiel, Princeton University, author of bestseller, Random Walk Down Wall Street.He has boosted his allocation to highly rated tax-exempt bonds in his taxable account late last year, since yields available on some of these bonds were “unheard of.”

Jeremy Siegel, Wharton School of Finance, and senior advisor to Wisdomtree ETFs“Emerging-markets stocks have ‘gotten cheap enough to really give value now.’”He has recently raised his allocation for junk bonds.“Stocks and high-yield bonds will move together as the crisis passes,” rebounding from their depressed levels, the 63-year-old Mr. Siegel says.Mr. Siegel keeps one-quarter to one-third of his foreign-stock allocation in emerging markets, and “they’ve gotten cheap enough to really give value now,” he says. He has bought some more of these shares as they’ve declined in recent months.Mr. Siegel recently added some U.S. real estate investment trusts to his portfolio, which got “very cheap” after declining sharply last year, he says.

Muriel Siebert, Muriel Siebert & Co.She has recently been buying shares of companies like Pfizer Inc., Altria Group Inc., and General Electric Co. “I don’t mind buying a stock on the bottom and waiting,” says the 76-year-old Ms. Siebert. “But I do think when you get a market like this, you should be paid while you wait.” Pfizer and Altria yield roughly 8%, while GE yields over 9%.

David Dreman, Dreman Value Management LLCThe 72-year-old chairman and chief investment officer of Dreman Value Management LLC, says he has a roughly 70% stock allocation.Some battered stocks in the energy sector also look like bargains, Mr. Dreman says. He likes oil and gas exploration and production companies like Anadarko Petroleum Corp., Apache Corp., and Devon Energy Corp. If we don’t have a long world-wide recession — a scenario that Mr. Dreman thinks oil prices currently reflect — “we’ll see much higher prices for oil again,” he says.

Don Phillips, Managing Director, MorningstarInvests his entire individual retirement account in the Clipper Fund, a large-cap stock fund that lost about 50% last year. Early this year, he made the maximum IRA contribution to that fund, just as he has for the last 20 years. “It’s long-term money, and you have to look at it that way,” he says.

Jim Rogers, Rogers Jim Rogers, a 66-year-old veteran commodities investor, is putting new money into Chinese shares. He’s focusing on sectors of the economy that the Chinese are pushing to develop, such as agriculture, water, infrastructure and tourism. Mr. Rogers is putting some new money into commodities, particularly agricultural commodities. “We’re burning a lot of our food in fuel tanks right now,” he says.

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