Although Steinmetz is largely known for bonds, his funds occasionally trade in foreign equities. One sector that he currently finds intriguing is Russian oil, which he believes could see a brief spike because of uncertainty about how a possible Iraqi conflict could affect the Middle East. But Steinmetz also would be quick to sell these oil stocks when war is at hand -- those higher oil prices aren't expected to last long.

"One way for U.S. investors to play the oil story is to buy the American depository receipts of Russian oil companies, including Lukoil (LUKOY), Yukoil (YUKOY) and Surgutneftgas (SGTZY). They are sitting on huge cash hoards, the need for outside investment has improved corporate governance (these companies are going to GAAP accounting) and the premium on the ADRs has shrunk to nothing as the local markets have opened up. Note that these are highly speculative and have been extremely volatile stocks."

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"We believe the U.S. economy is going to gain traction and that the backdrop is going to improve. So that should favor the cyclical segments of the market in aggregate. That being said, there's still a great deal of risk in the market, and you have to acknowledge that. Emphasizing stocks that pay significant dividends is a way of participating in the market at a diminished risk."

Limited Brands

"In the consumer discretionary sector, the retail area, The Limited would be a name that we would favor. It pays a 2 percent yield, which is higher than the market average of 1.7 percent."

Fluor

"In industrials, Fluor is a service-oriented industrial company, and a stock that pays a dividend greater than the market average."

DuPont

"And finally in the materials sector, DuPont, which pays a dividend yield in excess of 3 percent, which is very significant. It's also a company that has re-oriented its sales over time to be somewhat defensive."

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L'Oreal (LORLY)

"L'Oreal is a stock that we recently bought for our portfolios. And it's interesting. We all know that L'Oreal is selling cosmetics all over the world. It's Lancome. It's Maybelline here in the United States and in other parts of the world. But it's also selling at the lowest valuation in five years at the same time that it's continued to grow its revenue, and importantly, its profits."

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