Looking for Income in All the Right Places
12/05/2008 10:50 am EST
Moderator David Stevenson, columnist for The Investors Chronicle, and his panel of experts shared their views on the global economy and markets, while making their case for the opportunities provided by income investments.
Rodney Hobson, financial journalist and author, noted that while it may be awhile before world markets revert to growing capital gains, there are plenty of investments that will provide income, in the meantime. He suggested that investors focus on the companies that sell the products that consumers need, in good or bad times, including groceries, gas, electricity, and water. Further, Hobson advised that small companies with niche markets provide an interesting option.
Douglas Moffitt, editor-in-chief of Successful Personal Investing, said his income philosophy is simple-he looks for companies that have the 'income to pay his bills'. He noted that he expects most companies on the FTSE100 to maintain their dividends during these challenging times. Moffitt also shared his portfolio allocation strategy, warning investors to never initially invest more than one-fifth of their monies in any one investment and to spread subsequent investments in that company over a period of five years.
David Keeble, executive director/global head of interest rates strategy at Calyon, addressed the global economic crisis, noting that inflation turning into deflation may become a problem. Yet he believes central banks around the world will ultimately be successful in turning economies and markets around with their various stimulus efforts. Keeble noted that interest rate cuts were having a positive affect on the Gilt, and advised investors to keep an eye on inflation-linked bonds, as they may offer positive returns, should rates stay higher than economists are currently predicting.
Wrapping up the panel discussion with audience questions, the panelists reiterated their belief that the current uncertainty in the markets, as well as the limited potential for capital gains, creates an environment in which investors may continue to make money by utilizing income investments.