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Investors May Want to Stay on the Defensive
18 Jan 2012 EST - CNBC.com
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Stocks are probably in for another bumpy ride this year, but that doesn’t mean investors should steer clear.

By making selective and defensive picks investors still should be able to eke out some decent returns — at least better than the paltry payouts offered by money-market funds these days, market strategists and portfolio managers say.

“A lot of headwinds, including political paralysis in the United States and Europe, have been weighing on the market and that’s going to continue in 2012,” says Brian Gendreau, market strategist with Cetera Financial Group. “But we still recommend a substantial allocation to equities.”

Gendreau likes defensive plays such as high dividend-paying stocks and defensive sectors including healthcare, consumer staples and utilities.

He advises investors to be cautious when it comes to the energy and technology sectors, which tend to have a lot of global exposure, and also to be wary of the downtrodden financial sector.

“Financials are beaten down,” says Gendreau. “Someday they’re going to be a great bargain, but we are not brave enough to recommend them to our clients yet.”

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