The best companies to invest in are those which offer the greatest reward opportunities given their market value. While this may seem simple it is quite different from how most investors choose what to invest in. Choosing the best individual stock to invest in should include fundamental analysis, technical analysis, and risk analysis of the company, its industry, and the market. But risks can be mitigated, or even eliminated, with proper diversification and an asset allocated portfolio of stocks. Therefore selecting stocks within the context of a diversified asset allocation portfolio allows investors to concentrate on fundamental and technical analysis and to a much lesser extent on risks.

Fundamental analysis is a process of evaluating a company’s revenues, expenses, assets, liabilities, cash flow, dividends, etc., and how they relate to each another to create value for future owners of the stock.  Technical analysis is useful to determine how the market has previously valued, and is valuing today, the fundamental worth and future prospects of the company stock.

Portfolio asset allocation and diversification allows investors to temporarily forget market risk, industry risk, and company specific risk when analyzing potential companies. When deciding the best companies to invest in,  investors can concentrate on the value the stock market is currently giving a company’s stock as compared to its’ fundamentals and opportunities or potential rewards.

Stock prices fluctuate from time period to time period.  Some become investor favorites and some fall out of favor even though nothing may have changed fundamentally.  The knowledgeable and disciplined investor will take advantage of bargains by investing in high opportunity stocks when they are out of favor.

Stocks that currently could be considered out of favor and which fit into a diversified asset allocated portfolio might include pharmaceutical Eli Lilly (LLY) with a current dividend yield of 6.0%, telecommunications giant AT&T (T) yielding 6.9%, utility Exelon (EXC) yielding 5.4%, and ishares MSCI Brazil Index (EWZ) recently down almost 30% from it’s 52-week high. The fact that Brazil is hosting the 2016 Olympics should increase their growth rate and economic stability.

If you could use help with your asset allocation, proper diversification, and ideas for the best companies to invest in consider the DO IT YOURSELF INVESTMENT MANAGEMENT approach of the Arbor Investment Planner.  The AIP provides the Arbor Asset Allocation Model Portfolio (AAAMP) to its subscribers for a low flat fee.  Do it yourself investing is made easy with AAAMP, Trades Alerts, and Updates which are e-mailed directly to subscribers.  Consider becoming a member today!

More information available at www.AAAMP.com.

How do you increase your investment income in a low interest rate environment? It’s been a very difficult period for investors seeking low risk income. Short-term rates are near zero resulting in Money Markets, CD’s, and Treasury Bills offering historically low yields. Long-term yields have improved the past year, but investors are learning the hard way that when rates go up, bond prices fall.  The risk/reward ratio for bonds seems to be unfavorable.  If rates trend higher over the next few years falling bond prices will erode investors’ principal investment.

One alternative to increase portfolio income is to put a portion of your income investments into dividend paying stocks. Much of corporate America is flush with cash and generating cash flow sufficient to pay and increase their dividends.  Ideally, look for companies with stable businesses whose profits and cash flows are growing at least as fast as their dividends and that are not relying on debt to finance their payouts.

Utility stocks may also be a good bet because the market is currently overdue for a correction. The utilities sector is one of the least correlated to the general market.  The Arbor Asset Allocation Model Portfolio (AAAMP) owns dividend paying stocks such as Intel (INTC), Chevron (CVX), AT&T (T), and utility Exelon (EXC) among others, for income and capital appreciation.

If you could use help with your portfolio asset allocation and research of individual stocks and ETFs, consider a subscription to the Arbor Investment Planner.

More information available at: www.AAAMP.com

There are approximately 3.4 trillion dollars of outstanding Commercial Real Estate Loans of which about 1.3 trillion will become due between 2010 and 2013. Commercial Banks hold nearly one-half of this debt, concentrated among small to midsize institutions. Re-financing will be a challenge for many projects that already owe more than the value of their assets.

With vacancies expected to be near 18%, defaults and foreclosures are expected to soar putting more downward pressure on already depressed commercial real estate values. This also means additional troubles and many more bank failures in the foreseeable future; resulting in less capital being available for investment in commercial real estate loans.

Investors who want to speculate on the Commercial Real Estate woes may want to consider purchasing the UltraShort Real Estate Proshares (SRS) which is designed to move twice the inverse of the Dow Jones U.S. Real Estate Index. SRS is currently trading near a 52-week low at about $6.  This ETF traded over $200 in the fall of 2008.  Any asset that can go from $200 to $6 is extremely risky and could easily wipe out most or all of your investment. However, if Commercial Real Estate troubles develop this could be an investment with huge upside potential.

The passing of ObamaCare greatly increases the role of government in our health care. While there may be a few beneficial items in the bill; the vast majority of it will hurt the middle class. Health Care stocks soared immediately after passage because the bill morphed into a gigantic giveaway to the very people the President demonized to get the bill passed. History shows us when the government takes control of private enterprise; markets become less efficient and more costly.

The growth of government in this bill is significant including $500 billion in new taxes. This does not include the billions of dollars in gimmicks and double counting to hide much of the taxes and/or increased debt that will be required to pay for individual and state mandates. The mandate requiring everyone to buy insurance (probably unconstitutional), and the requirements placed on insurance policies will cause premiums to skyrocket and hurt the middle class who will be subsidizing the unhealthy.

In the meantime, the poor will get benefits, the rich will find ways to beat the system, and the middle class will get crushed through higher federal and state taxes, slower job growth, and higher insurance premiums. It is probable that increased premiums, taxes, and the debt burden caused by this bill will force a choice between a free market system and a single-payer government run plan later in the decade.

As investors we have to analyze the current environment and try to take advantage of opportunities and avoid as much risk as possible. Here are two stocks that will benefit from the health care bill and the current economic environment.  Both Wal Mart (WMT) and CVS Caremark (CVS) are companies that will benefit from increased prescriptions for the 30 million new people covered and to seniors who will have more of their prescriptions costs paid for. I have not purchased these stocks for the Arbor Asset Allocation Model Portfolio (AAAMP) because I believe they are a little over priced right now.  I hope to add these great companies to the portfolio at lower prices.

While many developed markets, particularly the United States, embrace big government and socialistic policies that result in slow growth and high unemployment, many of the emerging markets are moving in the opposite direction. Countries such as Brazil and India have moved in the direction of free market economics and have rebounded quickly after the recent global crises. As a group, emerging markets provided investors with an annual rate of return of 10% for the past decade; while the S&P500 returned nothing.

When investing in Emerging Markets the Arbor Investment Planner recommends using Closed-end Mutual Funds and Exchange Traded Funds (ETFs) for instant diversification and low costs. Templeton Emerging Markets (EMF) has been a long term holding of the Arbor Asset Allocation Model Portfolio (AAAMP) because it provides excellent management, a sound investment record, and diversification among many growing economies.

Brazil has the tenth largest economy in the world and the fifth largest as measured by land mass. With a population of 193 million and a 2 trillion dollar economy, it is a political and economic leader in Latin America.  However, social and economic problems have kept it from being an effective global power. But future economic growth may drastically change the role of Brazil in our world.

The booming global demand for commodities, particularly energy and agriculture, is a major proponent of a robust Brazilian economy. Brazil is now a global power in agriculture and natural resources; two areas that are expected to provide strategic advantages for decades to come. (See “Five Essential Themes for your Portfolio in 2010: http://tinyurl.com/yaj576a).

Brazilian exports are booming and include aircraft, electrical equipment, automobiles, ethanol, textiles, footwear, iron ore, steel, coffee, orange juice, soybeans, and beef.  The country has been increasing its’ presence in international financial and commodities markets and is perfectly situated to take advantage of global trends. It can meet growing demand for its’ products with an ample and efficient work force at competitive prices. Hosting the 2016 Olympics is only going to accelerate the economic growth of Brazil including billions of dollars in infrastructure investment that will benefit the country for the next decade and beyond.

How and when you make investments in any emerging market country is critical to investment success. Diversification is always an important consideration and therefore low cost ETFs are a great way to add country specific investments to your portfolio. But due to severe volatility; your asset allocation should be small and only made on pullbacks in prices.

The Arbor Asset Allocation Model Portfolio (AAAMP), for the benefit of Arbor Investment Planner subscribers, holds a position in the ishares MSCI Brazil Index ETF (EWZ).  If you would benefit from specific investment options and help with asset allocation, the Arbor Investment Planner can help you manage your own portfolio.

More information at: www.ArborInvestmentPlanner.com

The dollar still accounts for 65% of the world currency reserves.  Since the price of the dollar is measured relative to other world currencies you must analyze the dollar in comparison to other currencies, especially the euro, the pound, and the yen. Western Europe and Japan are both growing slower than the United States. They are also plagued by big budget deficits, large debt loads, huge unfunded liabilities, weakened banks, and falling real estate prices.

When our economy begins to recover, short-term rates will most likely rise significantly which could give the dollar a huge boost. Investor sentiment for the dollar is so bearish it is at levels that almost always signal a bottom.  If everyone believes an asset will decline, then everyone has already sold. Investors who look to buy low and sell high can take advantage of this opportunity right now.

One way to profit from a rising dollar would be to purchase the PowerShares DB US Dollar Index Bullish ETF (UUP).  This is an ETF that seeks to replicate being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc.

The Arbor Investment Planner helps investors save and manage their own money.  More information on the Arbor Asset Allocation Model Portfolio (AAAMP) and long term track record is available here: www.ArborInvestmentPlanner.com.