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    Five experts’ ideas about navigating a choppy market

    Market ups and downs have left many investors feeling anxious.
    Richard Drew/Associated Press
    Market ups and downs have left many investors feeling anxious.

    The investment landscape can be a scary place. The stock market surge has stalled, and the market is too choppy to provide any reassurance. Savings accounts earn practically nothing. Bonds, a traditional haven, seem like a poor choice because interest rates are likely to go up. The stocks people invest in for safe, steady income, like utilities and health care, aren’t as cheap as before. The Associated Press asked five experts where they’re putting money. Here are their suggestions; you should do your own research before making any decisions.

    Blake Howells

    Portfolio manager, Becker Capital Management, Portland, Ore.

     His idea: big-name tech companies, regional banks

    Howells likes Microsoft and Apple, but not necessarily for their best-known products.


    He likes Microsoft not for the latest Windows operating system, which has garnered mixed reviews, but for the servers it sells ‘‘that make big companies and big data farms run.’’

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    He likes Apple not for the iPhone and iPad — after all, the company’s stock is down 19 percent this year and it’s largely because people are worried that Apple can’t keep churning out blockbuster gadgets — but because of the iOS operating system. He thinks it will help Apple keep customers who won’t want to go through the hassle of switching all the information on their iPhones and iPads to another system.

    ‘‘That gives it a little bit more sticking power than a BlackBerry or a Nokia,’’ Howells says.

    He likes certain regional banks, like Pittsburgh-based PNC Financial Services Group and Minneapolis-based US Bancorp, crediting their plain-vanilla businesses of making loans and accepting deposits. He says they’re ‘‘in much better shape than they were at the start of the downturn’’ in 2008. But he’s iffy on the megabanks, even if some are selling at prices much lower than before the financial crisis.

    Rob Lutts

    Chief investment officer, Cabot Money Management, Salem

     His idea: energy stocks


    Lutts predicts domestic energy production will continue to expand, fueled by new technology. He’s especially interested in companies that make equipment for specialized production methods and has an eye on a Houston company, Dril-Quip Inc., that makes equipment for deepwater drilling.

    The United States is producing more crude and natural gas. The International Energy Agency predicts the nation will be he world’s biggest oil producer by 2017 and will produce all the energy it needs by 2035.

    ‘‘If you’re going to pick one cost that impacts all of America, it’s energy,’’ Lutts says. ‘‘And it’s unappreciated, how the energy industry has been turned upside down by new innovation.’’

    Margie Patel

    Senior portfolio manager, Wells Fargo Capital Management, Boston

    Her idea: consumer stocks

    Patel likes companies that make ‘‘the products we all consume every day,’’ like groceries and cleaning supplies. Returns can be more modest than in other sectors, but they’re also more stable in bad times. Lower prices for some of the commodities that companies need to make their products will trim costs.


    ‘‘The population is growing, and people have a little bit more money in their pocket to spend on a range of products,’’ Patel says. And while US economic growth looks only moderate, she says, ‘‘it’s still positive growth, and it’s still sustainable.’’

    Anton Bayer

    CEO, Up Capital Management, Granite Bay, Calif.

    His idea: corporate floating-rate and shorter-term bonds

    Pay attention, this one is a little complicated.

    The Federal Reserve has been buying $85 billion worth of government bonds each month to try to make long-term loans cheaper and stimulate the economy. As long as the Fed is propping up demand for bonds, the Treasury doesn’t have to worry much about enticing buyers and can pay low interest rates on them. If the Fed pulls back on its bond-buying — something chairman Ben Bernanke has said could happen soon — the interest rate on bonds will go up.

    That’s bad for people who already hold the Treasury bonds. Here’s why:

    Most Treasury bonds pay a fixed rate. If you own a 10-year Treasury note that pays 2 percent interest, and rates go up to 3 percent, you’re still going to get paid 2 percent. That means you’re missing out on investing in a higher-paying bond. It also means the underlying value of your bond is going to go down: No one wants to buy a bond with a 2 percent yield in a 3 percent yield market.

    You can get all your money back if you wait until the bond matures, but that will take 10 years.

    Bayer recommends floating-rate corporate bonds, because the interest rates they pay change along with the Fed’s interest rate. Be careful, though, because floating-rate bonds are often issued by riskier companies.

    Bayer also recommends fixed-rate bonds with shorter durations.

    If you own a bond paying a fixed interest rate, and then interest rates rise, it’s better to be able to get your money back in one year instead of 10.

    Keep in mind that shorter-term Treasury bonds pay much lower rates: A 10-year note is paying about 2.1 percent. A one-year note is paying 0.1 percent.

    Bayer says investors used to the higher rates of previous decades will have to retool their strategies.

    ‘‘That’s the biggest mistake that investors are making right now,’’ Bayer says. ‘‘What worked for the past decade is not going to work now.’’

    Mickey Segal

    Managing partner, Nigro Karlin Segal & Feldstein, Los Angeles

     His idea: apartments

    To Segal, it’s a great time for apartment-related investments, thanks to high demand and low supply.

    He thinks more people will have to rent because it’s tough to qualify for a home loan. And with higher mortgage rates all but inevitable as the Fed prepares to pull back on bond-buying, some lower-income buyers may not be able to afford a home.

    Another factor that could encourage renting is the tighter supply of homes. In some areas, investor groups are buying up houses to use as rental properties, hoping to sell them later for a profit. That limits the number of homes for sale. The National Association of Realtors says there aren’t enough existing homes to keep up with demand.

    And there aren’t as many new apartment units coming on the market. Builders broke ground on apartments at an annualized rate of 234,000 in April, compared with 351,000 in the same month in 2005.

    Put it all together and you can expect higher rental prices. The median asking rent for a vacant apartment was $718 per month in the first quarter, according to the census. That was roughly flat from the year before, but up 5 percent from two years ago.

    ‘‘You have more people looking for a place to live who either lost their homes or couldn’t afford their homes,’’ Segal says. ‘‘And there’s been no new real development happening for a few years.’’

    Segal recommends investing in limited partnerships, which are offered through brokerage firms.