Buy-and-Hold, Hedging, and Values: Top Strategists Offer Tips

In a recent panel discussion held by Charles Schwab, several top managers and strategists offered their take on the current market, as well as portfolio management tips regarding buy-and-hold investing, hedging, and how to succeed if the current rally falters.

Among the panelists was Ron Baron, chief investment officer at Baron Funds. Baron says that “investors have opportunities now to buy stocks at the cheapest prices in years,” reports AOL Daily Finance’s Matthew Scott.

Erik Ristuben, Russell Investments’ chief investment officer, said, meanwhile, that in the short term investors should focus on the highest quality financial, technology and consumer discretionary sector survivors in the U.S. But over the next decade, he says, investors should use a more global approach.

“Every company everywhere in the world is competing on a global framework and you must begin to challenge some of your home-country biases,” he said. “You’ve got to push yourself to look overseas more than you might be comfortable.”

Schwab’s director of trading and derivatives, Randy Frederick, said that learning how to hedge is a critical but overlooked strategy for most investors. And, he says, “You have to learn how to not just buy and hold, but how to buy and watch. You can’t just buy and forget about it.” He says investors can benefit from using covered calls to protect the riskiest portion of their portfolios, Scott reports, though Frederick added that one needs a good exit strategy when using options.

Another Schwab strategist, Brad Sorenson, director of sector research, said the global focus on reflation and rebuilding make infrastructure plays in the U.S. or abroad attractive right now.

All in all, the panelists said to expect money to flow back into stocks. “With many investors still holding a great deal of their money in low-interest money market accounts, the panel agreed that much of that money should be heading back into the market soon on the fear that investors won’t want to miss out on what’s left of the current bull market run,” Scott said.

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