DOLLARS AND SEN$E

We’re over the “cliff,” now what?

BY CHRIS HANLY

Investment Consultant, Gary Goldberg Financial Services

If you’re anything like me, you’ve uttered the phrase “If only I had bought …. back then.” Well, back then may be right now.

One of the major concerns for markets has been the pending fiscal-cliff and what tax rates might look like – well, those questions have been answered. Of course, there are more headwinds ahead, and I do expect ongoing market volatility. None-the-less, with economic data improving around the globe, and a worse-case scenario avoided, I’m quite optimistic and bullish for 2013. The upcoming debt-ceiling debate could certainly cause a market sell-off, but as you’ve heard me say many times before, market timing is a futile exercise. Rather, I believe smart investors should take advantage of the current market anxiety and look for opportunities to buy some stocks on the cheap. I’m not much of a tea-leaf reader, and my crystal ball is pretty cloudy, but the stars seem to be lining up for a short-term selloff, followed by range-bound trading in the first quarter.

Subsequently, I believe markets will pay attention to economic fundamentals and are likely to rally and close out the year with a very strong second half. If I’m correct, investors could book double-digit gains in 2013. Globally, data shows Chinese growth being more robust than most expected, while the European debt crisis that has plagued global markets for the past five years is finally showing signs of progress. In the United States, manufacturing data, consumer and business sentiment indicators and the housing market are all much stronger than forecast. Looking at valuations, and given that we now know what taxes on dividends and capital gains will be, I believe high-quality, high dividend-paying stocks are very attractive – particularly in the Food & Beverage sector, Energy sector, and Material sector. My firm, Gary Goldberg Financial Services, is focusing on companies that have a strong balance sheet, pay a dividend greater than the 10-Year Treasury yield, and have an expected earnings growth rate above 8% over the next five years. As a matter of fact, our January 2013 Dividend Buster Program has a yield just shy of 5 percent, and if things go as we predict, an expected earnings growth rate just under 10 percent.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at 845-368-2900, ext. 247 or chris.hanly@garygoldberg.com.