Not surprised by Ben Bernanke’s comments yesterday that the economy is fragile and will keep interest rates low for an indefinite period of time. I have to say that “indefinite period of time” phrase is a little spooky to me. Interesting that it took the market a few hours to figure out that low interest may not be a good thing in this case if the economy is still struggling. This confirms our thesis that the economy and hence markets will be choppy this year. Futures are up this morning, but my guess is it’s more of a reaction to some resolution of the debacle in Greece.

How do we play this market? We suggest a mix of stocks (dividend paying, of course!) in different sectors. We like KO (Coca-Cola) and INTC (Intel)to balance out the portfolio. You will find that on days when the market is strong, INTC will perform better than KO and the opposite is true on weak days. Dividends are important to us, but we also want to see future catalysts for growth in our investments.

KO – Stock has a 3% dividend yield (50% higher than the S&P!), over $1.00 in free cash flow/sh and only 17% debt to total cap!
1. Company focus on improving product mix like vitamin waters and healthy alternatives.
2. Attractive exposure to emerging markets.
3. Strong focus on cost controls.

INTC – 2.8% dividend yield, 5% debt to total cap, 13.4x 2010 est versus 14.8x for the S&P 500.
1. Strong demand for consumer items like computers, digital tv and cell phones continues even in a moderately growing economy.
2. Operating margins moving back to previous high levels.
3. As economy recovers, we can potentially see an increase in eps growth rate.