Kabarec Financial Advisors, Ltd.: 2005 Outlook Looks Most Promising In Foreign Markets Investing.

PALATINE, Ill. -- Kabarec Financial Advisors, Ltd. (KFA) suggests the best sectors to invest money in 2005--energy, healthcare and industrial--focusing on foreign markets.

"Even though we expect the U.S. market to continue to grow, it will be at a more moderate rate than the last couple of years," said Michael Kabarec, CFP(TM), CPA/PFS, principal of KFA. "European and Asian--particularly Japan, India, and China--markets are further behind the economic rebound," added Kabarec. "They're at where the U.S. was 18 months ago." Investors will likely see a higher return by putting their money in emerging markets and developing countries.

Kabarec suggests investing in unhedged funds. "You want to be exposed to foreign currency," he said. "If you hedge the currency, you're buying domestic assets."

The falling U.S. dollar is supporting this trend. KFA gives more weight to portfolios in the foreign bond market--up to five percent, instead of the typical two percent--because of the movement. The value of the dollar is expected to drive most investment trends in 2005.

Energy

KFA believes with expected higher inflation investors should take a serious look at the demand-driven energy market. KFA forecasts crude oil prices stabilizing at $38 to $45 a barrel--down from the peak $55 a barrel price this past fall. "It's still high, but acceptable," Kabarec said.

KFA recommends investing in the Canadian drilling company Ensign Resource Services Group--traded on the Toronto Stock Exchange as (ESI). "Investors should look at upstream stocks--the exploration and production part of crude oil and natural gas," said Amy Shang Fei, MBA, CFA(R), senior investment analyst. "Higher than historical average oil prices mean oil companies are motivated to spend capitals and oil service companies will benefit."

To diversify a portfolio and cover more basic material and commodity stocks, one investment vehicle KFA recommends is iShares Basic Materials Fund (IYM). "It's a mutual fund that trades like a stock," Kabarec explained. Mutual funds are priced at the end of the day, but the iShares Basic Materials Fund trades in concert with stocks.

Industrial

KFA also believes the weakening dollar will benefit large cap multi-national companies in the industrial sector. KFA predicts stocks with significant international market exposure will generate larger profits as these companies convert their revenue in foreign currency from their multi-national locations back to the U.S. dollar.

"In particular, we expect the office equipment and mail management company Pitney Bowes (PBI) to experience steady growth," Kabarec said.

Healthcare

In the healthcare sector, though, KFA believes mid cap companies have greater growth potential. "Most of them are niche players, and they spend a lot of money on research and development--more so than large cap healthcare companies," said Shang Fei. "They have the competitive advantage and can't be easily taken by overseas companies, particularly a medical device company."

For this reason, KFA favors Zimmer Holdings (ZMH)--the leading orthopedic company.

About Kabarec

Kabarec Financial Advisors, Ltd. is a "fee-only," full-service financial advisory firm with more than 20 years experience helping clients build better futures. It provides portfolio management and financial planning services. KFA's strategic focus is on preserving, protecting, empowering and perpetuating wealth for the benefit of its clients and its clients' future generations. Kabarec previously has been named by Worth, Money Magazine, Bloomberg Investment Management and Medical Economics as one of the country's best financial advisors.

For more information on investment strategies for 2005, consult Kabarec Financial Advisors at 847-934-7777 or www.kabarec.com.