Market Strategy in Tough Times

The Dow Jones Industrial Average has recently given back all its gains on the year.Fear is dominating the day,said Stephen Wood,PhD,Chief Market Strategist at Russell Investments.Liquidity is at a premium.People are accepting lower yields so they can sleep at night,losing money in the long run.This is a panic environment.Companies will have to fund pension plans,not hire workers or build facilities.They're gonna want to have dry powder so they don't have to go hat in hand in an illiquid market. What do you do?You need to look at a diversified,multi-asset strategy to generate return,in Dr.Wood's opinion. Robert Hagstrom of the Legg Mason Focus Fund thinks that,for investors,this is a very attractive time.Lower prices increase your rate of return.It's been said that,when the time to buy comes,you won't want to.Even trading is freezing up,which is a big problem for the market.The risk appetite is not very high. Seven percent of our portfolio is in financials,including JP Morgan Chase,the only money center bank in it.We are holding onto that position,Mr.Hagstrom revealed. JP Morgan Chase(JPM)

Life on the Financial Plateau

Stephen Wood,PhD,Chief Market Strategist at Russell Investments,thinks it could be an O.K. year.Earnings estimates are gonna decelerate,but the S&P 500 index is doing real well in terms of earnings per share.A 13% gain for the year will be predominantly based on earnings.From a corporate perspective,the U.S. looks relatively healthy.
The consumer is not dead;just deleveraging.Just lean into the consumer a little bit.Consumers saving is something we've seen for some time.
We've recovered and kind of plateaued out.It's not a recession,but it's not gonna be strong growth,either.Look at what's happened to the Treasury in the U.S.
Ultimately,we've got a long time to solve the problems-and they can be solved,which isn't necessarily the case in Europe.The collapse of Lehman Brothers on September 15,2008 really caught everyone by surprise.In Europe,it's not gonna be that startling.The question is,who's gonna be the one who gets hit,in Dr.Wood's view.
As its purpose,Russell Investments improves financial security for people.Founded in 1936,it has 163.4 billion dollars in assets under management for individuals,institutions and financial professionals.It also creates performance benchmarks in the form of the Russell indexes.

Investing Today:Strategies For a Choppy Period

According to Stephen Wood,PhD,chief market strategist at Russell Investments,what we're looking at is a square root sign,a market plateauing at a lower rate of growth.It's probably a significant slow patch in the overall recovery.This is not terribly surprising.
There are gonna be choppy markets.Consider Japan,the Middle East,the Greek debt issue-a lot of headlines could cause volatility.
You're probably in a lower return environment.A portfolio should be globally diversified and have more equities,commodities and infrastructure.
Dr.Wood likes JP Morgan Chase.It has a 2.40 yield and is an industry leader,coming through the financial crisis extremely well.It has a strong balance sheet and is a good,old-fashioned consumer bank.
He also favors Pfizer.The economy's gonna do O.K.,but not spectacularly.Pfizer levels the volatility.People stay in it longer.People are gonna have to ride out the volatility with a more disciplined long term time horizon.
As for Google,longer term,it's probably gonna be a name that's the 500-pound gorilla in its space,Stephen Wood believes.
Stephen Wood has been with Russell Investments since 2005.He has conducted research on the economy,capital markets,portfolio strategies and investor behavior,also serving as a commentator on those topics.In addition,Dr.Wood has worked with institutional clients and retail partners to explain Russell's investment process and portfolio management.
JP Morgan Chase(JPM),Pfizer(PFE),Google(GOOG)

Market Strategist Sees Grinding

Stephen Wood,Chief Market Strategist at Russell Investments,thinks we just kind of grind it up.It's gonna increasingly be a stock picker's market.Some of his current investment preferences are areas of consumer discretionary,staples,tech,commodities and fixed income.
Dr.Wood isn't convinced the upcoming U.S. election is all-important.He thinks we'll probably grind through more of the same.
Stephen Wood holds a PhD in International Political Economy from Claremont College.He helps manage more than 140 billion dollars of assets at Russell Investments,which serves more than 2900 institutional clients and millions of individual investors in 46 countries.
Russell Investments is the creator of the noted Russell Global Indexes,such as the Russell 2000 small cap index.It manages more than 400 investment funds.