NEW YORK (TheStreet) -- What should investors do during the second half of a year that's seeing the Dow Jones Industrial Average seemingly weakening, U.S. unemployment topping 9% and some analysts warning of a double-dip recession?
It depends, experts say.
"Investors do themselves a disservice by trying to analyze economic news because it's always lagging. Markets are the ultimate leading indicator," said Jonathan Hoenig, managing member of hedge fund Capitalistpig Asset Management and author of
Greed is Good: the Capitalist Pig Guide to Investing
"Investors need to stick to their own strategies and approaches, because headlines about the market are always deceiving," Hoenig said. "If somebody is retiring in 15 years, I don't think today's headlines should make too much of a difference to their investment strategy."
TheStreet recently asked Hoenig and other experts for the No. 1 tip they'd give U.S. investors as markets head into 2011's second half. Here's what each expert said.
Jim Cramer: Buy Big Exporters
Jim Cramer, host of CNBC's
, runs the charitable trust portfolio
and writes daily market commentary for TheStreet's
premium service. As Americans grappled with the fallout of the subprime crisis, he wrote the book
Jim Cramer's Getting Back to Even
. While the weak job market will continue to pose challenges to the economy, he says investors should consider buying shares of companies with strong exports.
Editor's note: This is an excerpt of a story that appeared earlier this week on RealMoney. Click here for a free trial, and enjoy incisive commentary every day.
: That's what brings me the autos, specifically
. Here's a company that people got all excited about because of Chinese sales -- not American sales. But the company's IPO window coincided with the shutting of the cheap-money window in China. I expect that by September, after this oil intervention, China will no longer be actively trying to slow the economy down. That means GM can start selling many more cars. It is a huge swing factor and the base in the stock is showing you that's what's to come.
( JOYC) and
could also be winners.
If commodity inflation has peaked, as I think it has, you want to do something with apparel, which needs oil down for shoppers to do better and cotton to come down so the raw cost is much less. It has to be international in basis and not just domestic because our economy will still not be strong enough. My two favorites are
because of Tommy Hilfiger and Calvin Klein - huge brands overseas that put through monster price hikes -- and
Jonathan Pond: Look for Dividends
Jonathan Pond is host of the PBS special
Grow Your Money with Jonathan Pond
and other PBS programs. A registered financial adviser, Pond has written 10 personal-finance books, including his latest work:
Safe Money in Tough Times: Everything You Need to Know to Survive the Financial Crisis
: I favor quality dividend-paying stocks, and mutual funds that invest in same. Should the recent market malaise continue, history has shown that dividend stocks generally fare better in dour markets than equities that don't pay dividends. But if the bull market continues, dividend stocks should amply reward investors - and all along you'll enjoy dividends that continue to enjoy a low federal tax rate.
If you're interested in individual stocks, consider
( AGL) (4.5% dividend yield),
Johnson & Johnson
(3.3% dividend yield),
Procter & Gamble
(3.1% dividend yield) and
(5.4% dividend yield).
If you prefer to cast a wider net with exchange traded funds, the pick of the litter is the
Vanguard Dividend Appreciation ETF
(1.9% dividend yield). If your preference is for an index fund, the
Vanguard Dividend Appreciation Index Fund
is a mirror image of the Vanguard Dividend Appreciation ETF.
Alan Farley: Go Small
Alan Farley is a private trader and publisher of
Hard Right Edge
, a provider of trading advice. He provides investing commentary to TheStreet's RealMoney and has written two books,
The Master Swing Trader
The Master Swing Trader Toolkit
. He sees investing opportunities among small-cap stocks.
is a Silicon Valley-based molecular diagnostics company that focuses on genetic and biothreat testing. It sold off from $33 to $5 during the bear market, turning higher in March 2009. The recovery returned to the high in May of this year and an all-time high earlier this week. Once the price stabilizes, look for a steady uptrend that lifts this superior small-cap into the $50s.
, a Virginia software provider, was a tech bubble darling that fell from grace at the start of the millennium, dropping in a pre-reverse split decline from $3,330 to $4. It bounced to $133 at the height of the last bull market, returning to that level in March of this year. The stock is trading at a 10-year high, so investors should sit back and wait for a pullback to $150. That price level should mark an excellent buying opportunity, ahead of an uptrend that could hit $180 in coming weeks.
David Bach: Time for Muni Bonds
David Bach, a former
senior vice president, appears regularly on the NBC
show's "Money 911" segment. He's also authored 12 personal-finance books, including two New York Times No. 1 bestsellers. Bach's latest book is
Debt Free for Life: The Finish Rich Plan for Financial Freedom
: If you have any debt with an interest rate over 6%,the best investment you can make is to pay it down faster - it's a guaranteed return on your money that you can't earn anywhere else right now without risk.
If you don't have a lot of debt and you're in a high tax bracket, I would recommend searching out municipal bonds. I've been investing in closed-end muni-bond funds since December and the rate on my funds is 7% tax-free - and the funds are up for the year on average and outperforming the stock market.
Lastly, I'm investing in exchange traded funds that pay dividends. I like the
iShares S&P U.S. Preferred Stock ETF
. It's currently yielding around 7%.
Clark Howard: Buy Investment Property
Clark Howard is host of CNN HLN's
Clark Howard Show
and the syndicated
Clark Howard Radio Show
, which airs on more than 200 U.S. and Canadian radio stations. His fifth personal-finance book,
Clark Howard's Living Large in Lean Times
, will hit store shelves Aug. 2.
: The smartest move any American can make is to buy investment real estate. The tide has turned and rental income is rising at the same time that the cost of owning real estate is at ultra-low levels.
Cash buyers will be the big winners. Buyers are scarce and the sellers are desperately creating the perfect buying opportunity. I've bought five properties and I'm on the hunt for more.
Jonathan Hoenig: Reasses Your Stocks
Jonathan Hoenig, a managing member of hedge fund operator Capitalistpig Asset Management in Chicago, appears regularly on Fox News Channel's
program and other shows. A former floor trader at the Chicago Board of Trade, Hoenig is also author of the book
Greed is Good: The Capitalist Pig Guide to Investing
: Every investor and portfolio is unique, but that being said, I've been shorting
since March and expect the stock to trade even lower in the second half. GM received a $50 billion bailout that left taxpayers as its largest shareholders.
At its current price of about $30 a share, GM stock must rise about 75% for taxpayers to break even - but published reports suggest the government is unwilling to sell at a loss, instead opting to hold out until the stock at least rises to its IPO price (if not higher). This is the same irrational "sunk cost" fallacy that kept investors holding onto
since buying it at $80 back in 1999.
I just feel like the market isn't going to be so accommodating to the government and will instead test the downside on GM's price.
Written by Jerold Leslie in Boston.