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Wealth Management
Opportunities in Uncertain Times
A depressed stock market holds profits for investors who can overcome their fears.
This is not an end-of-the-world environment that we’re in. 
Greg Walker
J. P. Morgan Private Bank
Managing director, Florida investments, Palm Beach
Assets under management: $440 billion (globally)
Minimum investment: $25 million but can vary
What he likes: In July 2007, Walker began raising cash for his moderate-risk clients, building cash positions to 20% instead of the typical 2% to 3%. This past January, he began investing that cash in distressed credit instruments, first to leveraged loans and mezzanine debt and more recently in high-yield corporate bonds and distressed debt hedge funds. The private bank also recently began adding U.S. stocks back into portfolios, using an S&P 500 exchange-traded fund.
What he doesn’t like: “We’re staying away from Europe,” says Walker, explaining that potential wage pressures on companies as well as housing bubbles in England and Spain are two strikes against the region. He’s also staying away from investments in the euro. He expects the dollar to continue to strengthen in the short term.
On the financials: Walker says the private bank doesn’t like financial equities at this time, but it is looking at investing in one of the few private equity firms that specialize in financials.
Tax strategy: Tax legislation will likely be on the agenda no matter who wins the November election, Walker says. Some hedge fund investments could become less attractive to taxable investors because they often generate more short-term capital gains than other funds. On a selective basis, he likes municipal bonds. The private bank, which works with portfolio managers around the world, is looking at additional ones who use tax-sensitive screening.
