Managing your portfolio: diversify, diversify, diversify

Janet Engels is senior vice president and director of the private client research group for RBC Wealth Management, overseeing the firm's stock analysis and market strategy and model portfolio creation. She has spent more than 25 years working in the financial industry. Engels has worked for RBC and its predecessors off and on since 1982.

As part of her job, Engels conducts educational sessions for the firm's clients. She was in Yakima on Tuesday for a women's investment luncheon at Greystone restaurant. The Herald-Republic asked her about investing under uncertain economic circumstances.

Q: What is the one tip that anyone should know?

"Any investment and any plan needs to be monitored. Everybody becomes enthralled with a concept or a theme and then goes too far. Know where you are, know what you own and know the concentration of what you own. (You) should always think about diversification in (your) base portfolio."

Q: OK, so diversification is key here, but are there good investing concepts or principles that people should know about?

"Quality, large companies have the advantage over smaller companies. The larger companies have the ability to withstand the volatility (of the economy).

"With sectors, we still think energy is still something that people should participate in. The price we're paying for (information technology) stocks is not unreasonable. And because the portion of sales come from outside the U.S., the weakened dollar will benefit them."

Engels also talked about multiyear thematic investment.

"We feel strongly about water. Water is the third largest industry in the world. By 2035, one-third of the world will live in water starved areas. Thirty-six of the 50 states will face water shortages." She recommends looking for stocks or index funds that include companies working to meet that demand for drinkable and usable water.

Finally, consider stocks with dividends. "We believe this notion of dividend increases will continue. Where you see the bulk of dividend cuts are in (financial service companies)."

Q: Why should I invest when the national economy is crumbling?

Outside of consumer-driven industries, such as retail, and the financial and housing firms affected by the decline in the real estate market, the economy is not as bad as many people think, Engels said.

"If you look outside the financial sectors, corporate America is in good shape. They have low-leverage balance sheets. They have the cash.

"The long-term history of stocks is that corrections are followed by long-term gains. I think investors need to have a long-term perspective. That means a plan wand diversification in their portfolio. That allows the ability to weather these storms."

* Mai Hoang can be reached at 577-7685, or mhoang@yakimaherald.com.

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