Even if you think stocks are headed downward, you probably still want to own some--the ones that should hold up even if the market craters. The influential money manager Jeremy Grantham has been advocating this for a while. His money management firm, GMO in Boston, creates reliable return forecasts and right now assumes that large cap U.S. stocks will return a paltry 1.2% annually over the next seven years.
By contrast, so-called high-quality stocks will return 4.7% over the same period. Grantham hardly ever recommends individual stocks, but a peak into GMO's Quality stock mutual fund offers some suggestions (alas, the fund is only for institutional investors). Among the top holdings as of November: Microsoft, Oracle, Johnson & Johnson, Wal-Mart Stores and Coca-Cola. Quality stocks indeed.
NEXT: Embrace volatility
Money managers' picks for 2011
