Financial Advisers To Pocono Investors: Avoid Risk


By Tim Sohn

Pocono investors should consider focusing their money on less-valued sectors such as natural gas, real estate, regional banking, cyclical technology and utilities, according to local financial advisers, who said that a correction is obvious after the S&P 500 bounced back almost 70 percent in recent months.

“Hot sectors may be subject to higher risk and consequently a greater sell off in a correction. Remember, buying and holding is working especially well now,” said Steven Goodhue, financial adviser at Edwards Jones Investments in Milford.

Up-and-coming industries in the Poconos area, according to Goodhue, include:

Energy: Natural gas has less particle pollution and a smaller carbon footprint than coal or oil. Exxon-Mobile has purchased Houston, Texas-based XTO Energy Inc., an independent energy producer. Additionally, in the Poconos, alternative energy projects are moving ahead, such as Carbon County’s Solar Park and NASCAR’s recent plans to construct the world’s largest solar energy project at Pocono Raceway, in addition to wind turbine installations.

Robert Schwartz, second vice president of wealth management at Morgan Stanley Smith Barney LLC in Honesdale, agrees that natural gas is a hot commodity. “The Marcellus Shale area has opened up different potential investment opportunities,” he said. Part of the Marcellus Shale area is located in the Delaware River Highlands (particularly Wayne County), where there are large amounts of natural gas.

Construction: A revival of residential and commercial construction is expected as the economic recovery continues and population continues to grow.

Tourism: The economic recovery may keep people closer to home. Nearby gambling and high-priced gasoline may keep local residents from traveling far for entertainment. “The hospitality industry, in my opinion, is…still alive and kicking in the Pocono region,” said Schwartz.

Regional banking: Many Pennsylvania regional banks have avoided the risk-taking that occurred on Wall Street and at national banks.

Cyclical technology: Semiconductor equipment stocks have significantly increased during this market recovery. This reflects an optimistic outlook by semiconductor manufacturers. “As we move into recovery, people buy more PCs, phones, I-pods, etc. This increases general chip demand, increasing demand for semiconductor manufacturing equipment. The chip manufacturers anticipate this,” says Goodhue.

“In recent months I have met, face-to-face, over 1,000 business owners and managers within an hour’s drive from Milford. I feel they share the same concerns as worldwide investors. But they are also concerned about subjects particular to the Poconos, such as the impact of development and how it might affect their businesses. Many have taken a lifetime to build their wealth and want to minimize risk. They want to earn more than typical CD rates but not add too much risk. They often demand thorough explanations of the risk versus the rewards of each type of investment presented,” says Goodhue.

In terms of choosing between IRAs and 401(k)s, Goodhue recommends taking a 401(k) if it offers matching funds from the employer. But, he says, the better choice, if a match is not available, is the IRA, which usually has lower fees and more choices.

According to Schwartz, “Individual Retirement Accounts (IRAs) and 401(k)s are not mutually exclusive.  An investor’s choice to invest in one, the other, or both depends on his or her individual situation.  (Considering) factors like what is offered through the employer, the total income, and the individual tax situation help in the decision-making process.  As always, they should consult their tax advisor for the proper strategy.”

He also sees the economy in recovery mode as a good time to find potential opportunities for investment. “A conversation with an investment professional to review a person’s individual needs, risk factors and goals is important in building the proper portfolio,” he adds.