Forbes/Lehmann Income SecuritiesInvestor
The war with Iraq has 2 probable outcomesâ€”a quick, decisive victory or along, drawn-out conflict that spawnsterrorist counter-strikes against Americantargets. The former will most likelyresult in a market rally; the latter willprobably bring on a rerun of the bearmarket. How should physician-investorsreact to take advantage of either scenario?Richard Lehmann, editor of the (www.forbes.com/lehmann),recommends bulking up on fixedincomeissues, including bonds andbond-backed preferred stocks. If you'reunder 55, Lehmann says, reposition yourportfolio to a 50% stock/40% fixedincome/10% cash ratio. Knock a percentagepoint from your stock holdingsfor each year over age 55.
If you have to sell losing stock toaccomplish this, bite the bulletâ€”youcan use the losses to offset any gains.If you have no gains, you can carrythe losses forward to use againstfuture profits, making those profitsvirtually tax-free. Lehmann also recommendsa dose of risk for your portfolio,in the form of junk bonds andbond-backed preferred stocks. Bondsand bond-backed preferred stocksthat are convertible into commonstock are a good way to wait for apost-war rally, while getting paid niceyields for your patience.