Scott Holstein

Walnut Street Securities in Feasterville, Pa.

Scott Holstein prefers debt over equities. "You have a stronger position for recovery if a company experiences difficulties as a debt holder and also the benefit of having cash flows to invest during these volatile market times," he says. His current focus has been municipal bonds. He recommends sticking with high-quality general obligation bonds issued by large municipalities and school districts that have definite cash flow, rather than debt issued by hospitals or other single-revenue projects.

Holstein says some money seems to be flowing back into muni bonds, which got beaten down in 2008. But the rates still look attractive. As of Feb. 5, 10-to-15-year insured munis are yielding up to 4.50% tax-free, with a taxable equivalent yield (using a 33% federal tax rate) of 6.72%. And 10-to-15-year investment grade munis are yielding up to 5.5% tax-free, with a taxable equivalent yield of 8.21%, he says. That compares with the 2.89% yield for the 10-year Treasury bond and 4.83% for 10-year triple-A corporate bonds.