Where to invest $10,000 if it’s just burning a hole in your pocket

• Russ Koesterich expects an economic slowdown and suggests that investors gravitate toward high-quality companies that can generate steady earnings regardless of the macro backdrop. And in his view, mega-cap tech names fit the bill.

• Eric Crittenden thinks nuclear power is here to stay, and recommends investing in uranium miners. As an added bonus, the sector has a low-to-moderate correlation with conventional stocks and bonds, potentially increasing a portfolio’s diversification.

• Sarah Ketterer reckons well-managed companies in the medical technology industry are starting to look like attractive long-term buys, especially after some of them saw their share prices fall this year due to recent breakthroughs in weight-loss drugs.

Once in a while, you stumble into a little windfall – you get a bonus at work, an investment pays off, or you come into a small inheritance. The question is: what should you do with it? You can get decent yields on cash these days, sure, but to generate higher returns, you’re probably better off investing it. Three leading wealth advisors recently shared their top ideas with Bloomberg, and I’ve taken them a bit further to help you put them into action.

Idea 1: Mega-cap tech stocks.

Russ Koesterich, a portfolio manager at BlackRock, expects higher interest rates and tighter financial conditions to lead to an economic slowdown. So he says it makes sense now to gravitate toward high-quality companies that can generate steady earnings regardless of the macro backdrop. And in his view, mega-cap tech names fit the bill: not only are they highly profitable and cash-flow rich, but they’re also remarkably consistent. And, unlike in the dot-com era of the 1990s, many of today’s mega-cap tech stocks are no more volatile than the broader market. That’s important for investors who are in no mood to take any excess risk when they’ve got recession worries and geopolitical tensions to think about.

Here’s an ETF that could offer a good starting point.

One of the most popular ways to play mega-cap tech is with the Technology Select Sector SPDR Fund (ticker: XLK; expense ratio: 0.1%). It has $55 billion in assets and counts Microsoft, Apple, Nvidia, Broadcom, and Adobe as its top five holdings.

And here’s my take.

Koesterich makes some valid points, but as the saying goes, there’s no such thing as a free lunch – and that’s especially true in the investing world. Sure, today’s mega-cap tech names are high-quality companies with almost “assured growth”, but, as you’d expect, these stocks trade at higher valuations to reflect these positive attributes. The XLK’s trailing price-to-earnings (P/E) ratio, for example, is 35x, which is 40% higher than the S&P 500. Put differently, these high-quality stocks don’t come cheap. But if you buy into Charlie Munger and Warren Buffett’s philosophy that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price, then perhaps that shouldn’t matter too much.

Idea 2: Uranium miners.

Eric Crittenden, the founder and chief investment officer of Standpoint Asset Management, suggests looking for ways to diversify beyond a traditional stock and bond portfolio. He notes that few asset classes or sectors have shown positive returns and maintained a low-to-moderate correlation with a conventional portfolio this decade, but that one area that’s stood out is uranium.

Nuclear energy could potentially address the complex global issue of rising energy usage due to electrification, but without increasing emissions. Fossil fuels are facing increasing social and political challenges. Yet, Crittenden says, renewables appear too unreliable, intermittent, and costly to be a viable option anytime soon. Modern nuclear technologies, which are often overlooked, could offer a significant reduction in fossil fuel dependence with minimal carbon emissions. And unlike intermittent renewables, nuclear plants provide consistent power 24/7.

Here’s an ETF that could offer a good starting point.

Nuclear and uranium-related stocks struggled from 2007 to 2019, but have enjoyed a renaissance since 2020. They’re not low-risk, but they’ve shown an ability to produce significant returns while moving somewhat independently from stocks and bonds. For a fast-growing pure-play uranium stock ETF, check out the Sprott Uranium Miners ETF (URNM; 0.83%), which has $1.6 billion in assets and tracks about 40 companies that mine uranium around the world, with heavy weightings in NAC Kazatomprom, Cameco, and a physical uranium trust.

And here’s my take.

Uranium prices have been on a hot streak lately and the reason comes down to supply and demand: there’s less of it around, but the demand is growing. See, governments are thinking about building new nuclear plants to reduce their reliance on fossil fuels and secure their energy independence – particularly after Russia’s invasion of Ukraine. Plus, nuclear power is considered a clean energy source, which is a big deal right now and explains why the World Nuclear Association recently upped its forecasts for nuclear power use.

The problem is that uranium supplies are tight: its mining tapered off over a decade ago because people got spooked after the Fukushima nuclear accident in Japan in 2011. It meant there were fewer new mining projects and less of the stuff pulled from the ground overall. A recent coup in Niger, a major uranium producer, and mining production challenges in Canada have also squeezed supply. There isn’t a quick fix here: uranium projects take a long time to start, so the market will probably be tight for some time. As a result of all these factors, uranium is one of the top-performing commodities this year and just might continue that hot streak. Plus, it’s an investment that increases a portfolio’s diversification, and that’s a nice bonus.

Idea 3: Medtech.

Sarah Ketterer, the CEO of Causeway Capital Management, says well-managed companies in the medical technology industry, particularly in orthopedic devices, are starting to look like attractive long-term buys. And the reason comes down to the weight-loss drugs that have been the talk of the doctor’s office all year.

The new drug treatments have made headlines after successfully taking inches off folks’ waistlines. That’s sent the stock prices of the pharmaceutical companies producing these drugs surging. And, in an opposite reaction, investors have sold off stocks in industries perceived as losers – food and beverage makers, for example, but also companies that make and sell medical devices to treat conditions that stem from obesity. And that’s where Ketterer sees opportunities.While weight loss reduces stress on joints like knees and hips (and could potentially lower obesity-related orthopedic issues), factors like genetics, lifestyle, trauma, and aging still play significant roles in the need for orthopedic surgeries. And, even with healthier lifestyles and exercise, people are still prone to conditions like osteoarthritis, degenerative disc disease, and rotator cuff injuries.Here’s an ETF that could offer a good starting point.There isn’t an ETF that’s solely focused on orthopedic device makers for the simple reason that there are few pure-play stocks in that field. But one ETF that gets pretty close to the broader medical technology theme that Ketterer likes is the iShares US Medical Devices ETF (IHI; 0.4%), which has $5 billion in assets and tracks more than 50 US companies that manufacture and distribute medical devices. One of the ETF’s top 15 holdings is Zimmer Biomet, a maker of artificial joints for knees, hips, shoulders, elbows, feet, and ankles.And here’s my take.Major breakthroughs in weight-loss drugs this year will naturally create winners and losers, something I’ve discussed in a lot more detail here. Essentially, firms that stand to benefit are the drugmakers themselves, as well as their suppliers and distributors. Consumer healthcare firms that sell products to treat the side effects of weight-loss medications could also cash in.On the other hand, companies that stand to lose are mainly those that make and sell products to treat conditions that stem from obesity, including manufacturers of sleep apnea devices, knee and hip implants for osteoarthritis patients, and equipment for bariatric surgery.Having said that, Ketterer makes a good point: factors like genetics, lifestyle, trauma, and aging will still play significant roles in the need for orthopedic surgeries. What’s more, the weight-loss trend isn’t expected to impact makers of high-tech medical equipment such as MRI machines, pacemakers, and surgical robots. Finally, the wider medical devices industry is arguably a good place to be at the moment: companies in this segment tend to have stable revenue streams that are little impacted by what’s happening in the economy, and they have fewer issues with patent pipelines compared to their counterparts in big pharma. That makes them a good defensive addition to a portfolio in the face of macro uncertainty and rising geopolitical tensions.

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Capital at risk. Our analyst insights are used for information purposes only.