No defense against the market: a tumultuous economy hampered Walt Clark's defensive stock strategy.

Last year, Walt Clark, president and CEO of Clark Capital Financial L.L.C. (www.clarkcapital.net), chose five stocks exclusively for BLACK ENTERPRISE. His approach involved picking a mix of defensive stocks, those able to withstand volatile markets and hold up in uncertain times, and offensive stocks, those that tend to outperform the market when the economy starts to improve. Clark's strategy didn't do as well as he'd hoped: his portfolio fell 4.7% from April 8, 2004, to April 7, 2005, while the Standard & Poor's 500 Index rose 4.5% and the Dow Jones Industrial Average gained 1% during the same period.

Clark says soaring energy prices, rising interest rates, concerns about unemployment and inflation, plus uncertainty surrounding the outcome of the 2004 presidential election hampered his stocks' performance. And he doesn't think we'll see the first leg of the bull market until at least the fourth quarter of this year. Once the market starts to improve, Clark says valuations could continue to grow for the next two to three years: "Rising interest rates will cause a crimp in the robust real estate market, and I expect a shift in assets from the speculative real estate market back to stocks in 2006," he says.

The biggest disappointment in Clark's portfolio was Chinese online media company SINA Corp. (NASDAQ: SINA). Its stock tumbled 27.29%, from $41.19 to $29.95, largely due to regulatory scrutiny from the Chinese government that hurt revenue growth. Last year, SINA's interactive voice response service was temporarily suspended, and in February, the Chinese government banned fortune-telling advertising, which hurt the company's ability to promote its astrology and horoscope text message services.

Clark's other Internet pick, eBay Inc. (NASDAQ: EBAY), declined 4.82%, from $37.97 to $36.14. The online auction site suffered after it increased its user rates: sellers balked and threatened to use other auction sites. In spite of the loss, Clark says he's sticking with the stock, mainly because eBay is "investing an enormous amount of capital to build their infrastructure in China."

Clark's best pick was Tyco International Ltd. (NYSE: TYC), which rose 20.18%, from $28.50 to $34.25. Investors showed confidence that the manufacturing conglomerate's new management team would guide a successful recovery following theft and fraud convictions of two top executives. But Clark sold his shares of Tyco, explaining, "The high commodity prices have caused their profit margins to drop. They have to spend more money on production."

Although Amgen Inc. (NASDAQ: AMGN) inched up 0.77% from $58.30 to $58.75, Clark reasons that things could have been worse. The biotechnology company, which makes therapeutic drugs, held up better than drug makers Merck & Co., which lost 27.83%, and Pfizer Inc., which dropped 29.26%. "Most people would have loved to have Amgen compared to the whole biotech market," says Clark, "It's still an industry favorite."

And Clark's final pick, JPMorgan Chase & Co. (NYSE: JPM), which provides investment banking, securities, commercial banking, and wealth-management services, fell 12.34% from $39.70 to $34.80. "Banks make most of their money when rates are going down," says Clark. So with rates rising, JPMorgan Chase lagged.