Though last week's terrorist attacks have rocked the stock market, investors should stick it out and look for profitable opportunities, a financial expert told Good Morning America.
"Despite what occurs, keep the long-term view in mind. While there has been a great deal of tragedy and shock, unless your investment goals have changed you should not necessarily feel compelled to do anything at all," said Good Morning America's financial contributor Mellody Hobson, president of Ariel Capital Management in Chicago.
Good areas to invest in at this time include defense manufacturing, pharmaceuticals, food, oil and energy, and gold, she said.
"Other areas that will probably do well include security-related companies," Hobson said. "And that's just not the people with the guards who protect buildings, but also companies that create the computer systems, and provide disaster security. Every corporate executive last week was probably saying to themselves, what is our disaster recovery system if something were to go wrong?"
One company that specializes in disaster recovery is SunGard Data Systems, based in Wayne, Pa., but there are many others, she said.
Stick to Branded Products
Other areas that will be strong include companies providing essentials such as medication, food and even laundry supplies.
"I'm not sure you're not going to go to the store and buy bleach, like Clorox, because of last week's disaster," Hobson said. "Then there are basic products that Americans use every day, like toothpaste. Those kind of branded consumer products companies will probably not do as poorly as some of the other areas of the market like airlines and insurance companies."
Hobson says that investors can make the most money by scooping up stocks that are out of favor. Investors may want to consider investing in weak areas, such as hotels, entertainment companies, insurance companies, airlines, brokerage firm shares, mutual fund company stocks, and shipping companies like Federal Express.
For long-term opportunities, Hobson said she would look for great companies within those sectors while they are really cheap, with the exception of the airline industry, which seems to have chronic problems, such as energy costs, labor relations, customer drop-off, and now, heightened security costs.
The Fed lowered the federal funds rate by 50 basis points to 3 percent and also cut the discount rate to 2.5 percent from 3 percent previously. The moves mark the Federal Reserve's eighth interest rate cut this year.
The decision to lower interest rates is great for those with mortgages, but does not help those with savings accounts, Hobson said. Consumers who are grappling with credit debt don't have much to rejoice about, either. Lowered interest rates do not affect credit cards, as credit card companies do not adjust their rates based on federal interest rates.
Other Investment Tips:
Keep the long-term view in mind.
Don't read too much into market swings.
Review your portfolio.
Be patient and let the dust settle.
Have the courage to buy.