Experts Offer Advice on Investing in 2011
Andrew Leckey

How would you invest $10,000 in the coming year?

We pose that question annually to a panel of investment experts.

For 2010, funds based on select stock indexes have dominated the successful choices.

For example, the recommendations of Sheldon Jacobs, contributing editor of The No-Load Fund Investor newsletter, were boosted by the 18 percent gain of Fidelity Small Cap Enhanced Index Fund (FCPEX).

Paul Nolte, managing director of Dearborn Partners, saw his iShares MSCI Emerging Markets Index (EEM) exchange-traded fund rise 11 percent. Richard Cripps, chief investment officer of EquityCompass Strategies, and Hugh Johnson, chairman of Hugh Johnson Advisors LLC, each derived near double-digit returns from their recommended index ETFs.

This year's group is upbeat about investment prospects for 2011, with stocks considered a better bet than bonds. The economy may be improving slowly, and financial markets generally perk up after mid-term elections, they reason. Yet everyone is spreading their selections around as much as possible.

The panel now peers into its crystal ball for the coming investment year:

-- Cripps of EquityCompass Strategies:

"I am constructive on the market outlook for next year. The economy will continue to make upward progress and stocks are attractive relative to bonds. I would put $2,500 apiece in the stocks of Cisco Systems (CSCO), Wells Fargo & Co. (WFC), Waste Management, Inc. (WM) and Warner Chilcott plc (WCRX), which is a pharmaceutical company based in Ardee, Ireland."

-- Mark Salzinger, editor of The No-Load Fund Investor, Brentwood, Tenn.:

"There will be more certainty from Washington, and earnings will continue to be fairly good. Low rates with no inflation increase set up a decent year for equities. Oil-related investments will benefit from demand from the growing middle class in China and India, so put $3,000 in iShares MSCI Canada Index (EWC). Also invest $3,000 in Vanguard Long-Term Tax-Exempt (VWLTX) and $4,000 in an all-capitalization stock fund such as Artisan Opportunistic Growth Investor (ARTRX)."

-- Sam Stovall, chief investment strategist for Standard & Poor's Equity Research, New York:

"Our policy committee has a target of a 12 percent gain for the Standard & Poor's 500 in the coming 12 months. We think equity prices will stabilize in the near term and head higher in the coming year. Selecting individual stocks in different sectors, put $1,000 each in Genuine Parts Co. (GPC), Altria Group (MO), TransCanada Corp. (TRP), Hudson City Bancorp (HCBK), Abbott Labs (ABT), Harsco Corp. (HSC), Automatic Data Processing (ADP), Sonoco Products (SON), AT&T (T) and FirstEnergy Corp. (FE)."

-- Martin Kurtz, 2011 President of the Financial Planning Association and President of The Planning Center, Moline, Ill.:

"Some signs point to a stronger economy in the near future, but it is as fragile as grandma's antique mirror. Be optimistic but prepared to leave money invested for the next 10 years. My investment portfolio would be $6,000 in global stock funds, allocated to countries by worldwide market capitalization, with greater weight to value and small stocks. It would have $4,000 in high-quality short-term bond funds."

-- John Rekenthaler, vice president for research for Morningstar, Inc., Chicago:

"The theme for 2011 is much the same as 2010, meaning high-quality U.S. stocks 'yes' and long bonds 'no.' Invest in blue chip stocks by putting $2,500 in the Jensen Fund (JENSX) and $2,500 in Dodge & Cox Balanced Fund (DODBX). Put $1,500 in Artisan International Value Investor Fund (ARTKX) that picks stocks in mostly developed markets; $1,000 in WisdomTree Emerging Markets SmallCap Dividend ETF (DGS); and $2,500 in FPA Crescent Fund (FPACX), a go-anywhere fund that lends ballast to the portfolio."

-- Curt Weil, president of Lasecke Weil Wealth Advisory Group LLC, Palo Alto, Calif.:

"We are in for a decent market, going back to basics with dividends and real earnings better than low-interest fixed-income investments. Put $4,500 into U.S. stock funds such as Thornburg Investment Income Builder (TIBAX) and Wasatch Small Cap Growth (WAAEX); $1,500 in foreign funds such as Vanguard Total International Stock Index (VGTSX); $1,000 in real estate such as Third Avenue Real Estate Value Investor Fund (TVRVX); $1,500 in natural resources such as T. Rowe Price New Era (PRNEX); and $1,500 in fixed income such as PIMCO Floating Income (PFIAX)."

-- Johnson of Hugh Johnson Advisors LLC, Albany, N.Y.:

"Our outlook for the economy, earnings and stock prices is positive. We forecast that the economy will expand 2.5 percent in 2011 and 3.1 percent in 2012; S&P 500 operating earnings will expand 12 percent in 2011 and 20 percent in 2012; and the S&P 500 will rise 15 percent in 2011. Put $6,500 in common stocks such as SPDR S&P 500 ETF (SPY) and $3,500 in fixed-income index funds such as iShares Barclays Intermediate Credit Bond (CIU)."

-- Nolte of Dearborn Partners, Chicago:

"The year after mid-term elections has historically been very good for the markets. We should see a positive year but a bumpy ride because of intervention by the Federal Reserve in the financial markets. Play it conservatively. Put $5,000 in Vanguard Short-term Bond ETF (BSV), anticipating rates may begin to rise. Put $1,500 in commodities through iPath S&P GSCI Total Return Index ETN (GSP); $2,000 in iShares MSCI Emerging Markets Index (EEM); and $1,500 in Vanguard Large Cap ETF (VV)."

Available at Amazon.com:

The Seven Deadly Sins of Investing: How to Conquer Your Worst Impulses and Save Your Financial Future

Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back

What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions