June 30, 2010
“Over the next several years we will be gyrating back and forth between the different economic cycles of deflation, inflation, re-flation and stagflation, and each will require an entirely different investment strategy,” said financial author Keith Springer, president of Springer Financial Advisors.
“This is a very dangerous period, and investors must employ a tactical investment approach, as the old- fashioned buy-and-hold — buy-and-hope — approach will again prove disastrous,” he said.
For the time being, Springer is recommending investors adjust their portfolios for deflation, which he says will come courtesy of the aging baby boomer generation. “In this no [or] slow growth environment, income and dividends are critical,” he said.
The best investment opportunities, according to Springer, exist in master limited partnerships, which tend to offer 10%-plus tax-advantaged yields, such as Copano Energy LLC (NASDAQ:CPNO) , a midstream natural gas company, and Linn Energy (NASDAQ:LINE) , an independent energy firm; and in high-yielding stocks, such as Compass Diversified Holdings (NASDAQ:CODI) , which manages a group of small and middle-market businesses and has been called a poor man’s Berkshire Hathaway, and Ship Finance International Limited (NYSE:SFL) , a crude-oil shipping company that could benefit from the oil spill in the Gulf of Mexico.
Springer is also fond of bonds, including one that’s been beaten down because of its role in the Gulf of Mexico oil spill, the Transocean 5.25% coupon, due 2013. Two dozen U.S. senators recently asked Transocean Ltd. (NYSE:RIG) , which owns the world’s largest offshore drilling fleet and operates the Deepwater Horizon drilling rig that exploded on April 20, to postpone making a dividend payment “until the extent of your company’s responsibility” for the oil spill has been evaluated, Dow Jones reported. Springer’s other bond pick is a high yield bond, the First Data Corp. 9.875% coupon, due in 2015.
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