Young investor's 2-tier system makes money in tough market

NEW YORK — Patrick Smith is one of the investors managing to sidestep the disarray on Wall Street by following the advice of the pros and looking years ahead. At the same time, he's placing some short-term bets and making a bundle.

"Now is a better time to buy than at any time in our history," said the 25-year old investor, who, with a few years experience in the financial industry and a willingness to use a two-tier strategy, has seen his portfolio surge 85 percent this year.

Smith's strategy that prizes sensible long-term investing while also making the occasional short-term play might be worth emulating; he'll hang onto stocks he thinks are good long-term moves and then look for a company like Wal-Mart Stores Inc. that might hold up well in a bruising economy.

But until markets bounce back, he's taking advantage of other investors' fears with some quick moves: If a stock falls sharply, he might snap it up the next day in hopes of capturing a rebound and then selling just as quickly.

While his fast trades aren't what most financial advisers would recommend, Smith contends that investing in a difficult market can be as simple as looking for solid companies that sell products people need or want even in a recession. That might be a Procter & Gamble selling staples like toothpaste, laundry detergent and diapers. While that's not a new strategy on Wall Street, it's one he says can work.

"Look at the companies that are doing extraordinarily well right now — McDonald's, Wal-Mart. Those companies that make products that people need are strong bets on the future," said Smith, whose trades are tracked by the investing Web site

Beyond that, Smith points to a company like Apple Inc. that might be hit in a bad economy but that could be a wise long-term acquisition. "It has so much cash. It builds fantastic products that people use."