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Home  > Money >  Investing

The World Has Changed, So Should Your Portfolio
by Donald Van de Mark

This is probably not the time to sell stocks – And this reporter would never tell you to try and ‘time the market.’ But it just might be time to buy some select securities.

This tip comes from Dan Baldini, a private money manager at Oberon Capital.

"At this point we are watching one stock: MBIA (symbol: MBI - NYSE), a bond insurance company. It is well managed, very profitable and has good growth prospects. The stock has been hit because people think that some of the bonds that they have insured will default and that MBIA will have to step in and make the interest and principal payments. The possibility of this happening is remote and in the worst case the losses would be small. At $40 or less, the stock is at less than 10x next year's earnings and looks like a bargain. (The stock traded up today to above $46 a share). When it becomes apparent that they will not have any losses people will appreciate what a good business they have and the stock should trade up to $60 or so."

Along with a list of losers due to increased fear, there are undoubtedly some winners. For instance, cell phone makers and service providers could benefit from publicity that cell phones were vital in connecting victims with their loved ones in their final moments. Actually, giving the insecure ‘connectable comfort’ has long been a key mobile phone selling point.

Since a lot of businesspeople are now hesitant to travel, videoconferencing could be a boom business. The run-up in three videoconferencing companies -- Picturetel (PCTL), Polycom (PLCM) and Webex (WEBX) -- since the attacks makes them less appealing. Nevertheless, there’s evidence that executives who were forced to meet electronically didn’t hate it. Thus, they might be doing more meetings via technology in the future.

A friend who has relatives in the spice business also says that, in any time of crisis or extended uncertainty, people stay home and cook. Just ask any restaurant owner these days and you’ll see there’s some truth to that. People have to eat, so the food industry usually weathers recessions better than most. If you’re looking for stocks of firms that benefit specifically from more at home meals, try: Safeway Inc., (SWY), Albertson’s Inc., (ABS) and McCormick & Co., (MKC) the world’s leading spice maker.

Do not run out and buy these because they sound like good ideas – do your homework!  How has the management performed against their promises? Do senior managers own a lot of stock? It’s important that they do, so their interests are aligned with yours. Have these companies led their industry in terms of top line, (revenue) as well as bottom line, (profit) growth?  How does their price to earnings ratio stack up? And if you do buy any stocks right now, be prepared to track them. It’s up to you to decide when it looks like the stock price is getting ahead of the company’s long-term potential. Good luck!

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