Transcripts

Wall Street Worries

PAUL KANGAS: Investors seem to have a growing list of concerns, from interest rates, to geopolitical conflicts, to high oil prices. Still, experts say there are ways to help protect your portfolio until the clouds blow over. Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: If there`s one thing the stock market hates, it`s uncertainty. And these days, there are plenty of unknowns.

MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: There`s uncertainty about the economy, the direction of interest rates, direction of inflation, also on macroeconomic considerations. It`s a highly uncertain, vague environment.

MILLER: The good news is that experts have several strategies to help you protect your portfolio until the fog lifts. One suggestion is to buy dividend-paying stocks, because even if their prices decline, you`ll still get a cash payout. As an added bonus, dividend payers have been leading the market in performance.

SAM STOVALL, CHIEF INVESTMENT STRATEGIST, STANDARD & POOR`S: Dividend payers, in a sense, there`s nothing to dislike about them. Certainly, since the beginning of this year, they`re up 5.5 percent, whereas non- payers are up less than 1 percent.

MILLER: Stovall also recommend sticking with large, multinational companies because they tend to rely less on the U.S. for growth. As far as sectors go, some experts say it pays to be defensive. They recommend consumer staples, utilities, telecom and healthcare companies. Typically, these firms won`t lead the pack if stocks take off. But experts say they also don`t get hit hardest when the market plummets. STOVALL: Typically in a market downturn, there is no place to hide. On average, most if not all of the sectors in the S&P 500 post declines. What makes them defensive is that on average they decline less than the overall market and certainly much less than the highly cyclical areas of the market.

MILLER: Finally, some strategists say it might not be a bad idea to put more money in savings and money market accounts. That way, if the market tanks, not only will you be protected, you might also be able to buy good companies at cheaper prices.

METZ: Frankly, I think cash is a very attractive alternative here. You`re getting 5 percent just to wait and do nothing. No risk. If I were an investor with money to use right now, I`d keep a lot in cash.

MILLER: Uncertainty is expected to continue for a few more weeks. Many investors are waiting for the next employment report September 1. That, they hope, will provide clues about the outlook for the economy and interest rates. Erika Miller, NIGHTLY BUSINESS REPORT, New York.