Investors should consider buying into big companies with broad international exposure that pay healthy dividends, says Gregory Slayton, Managing Director of Slayton Capital.
Despite uncertainties stemming out of Europe and even in Asia, where China shows signs of cooling, a large company can shield itself from slowdowns in one area of the world with growth in others.
"If you determine that you have appetite for equities, which of course are more volatile and a lot more risky, again I like a couple of sectors. I very much like big dividend growth plays especially with large international exposure," Slayton tells Newsmax TV in an exclusive interview.
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"Some have been hit recently by some of the downturns internationally, but it does give a certain amount of diversification that frankly, I think, minimizes a long-term risk of a significant United States downturn, economically. So I like dividend growth, large and international plays — Caterpillar is one."
Be conservative and look for companies with lots of cash.
"One thing I love about dividend growth, a company that is paying dividends, I know they've got cash. And cash is always a great thing," Slayton says.
Don't be discouraged by slumping prices in some sectors, either.
Take energy, where natural gas prices are very low thanks to a supply glut.
Too much supply at home often means opportunity when dealing with a lack of supply elsewhere.
"Even thought the price of natural gas here in the United States is basically rock bottom, there's a huge arbitrage opportunity because the price of natural gas in other parts of the world is significantly higher, maybe two to three to four times higher. And there's real opportunity there the market is going to solve."
Don't rule out green energy either.
Alternative energy sources such as solar or wind often draw praise from environmentalists but criticism from some who say they cost a lot but don't meet supply anyway.
Solar energy grabbed headlines recently when panel manufacturer and supplier Solyndra went bankrupt not two years after receiving a $500 million loan guarantee from the Obama administration.
Don't give up on the sector yet.
"This is frothy market and there is a lot of garbage and you have to be careful about it. This is why it has been so traditionally difficult for the government to invest because usually when governments invest, whether it's the U.S. government or others, usually politics plays a role," Slatyon says.
"Obviously Solyndra was a disaster for everyone involved. That investment should never have been made. But there are going to be some big winners in this sector and that's where we want to play."
The economy, meanwhile is not making sharp recovery from the downturn as has been the case in past recessions, with growth remaining tepid at best.
The Federal Reserve has propped up the economy by cutting interest rates to near zero and pumping trillions of dollar into the financial system to steer the country from deflationary decline and promote investment and hiring.
Critics say Fed intervention will lead to inflation down the road, and for Slayton, it's time to let the economy stand on its own two feet.
"I'm not a big fan of Federal Reserve intervention," he says.
"I think the Fed is trying to make up for government policy failures and I think that is a very dangerous prescription for the long-term health of the American economy."
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