myfinancialmarket.com

When I started writing this blog, the thought was to periodically write about various equity investments - stocks and funds of stocks, describing the various types of investments and which ones are doing well. For many years of investing, there was always a sector to find doing well, whether it be technology, medical, energy, real estate, international, or even gold. Then along came 2008 (and now so far 2009) in which we had a “Perfect Storm” condition — that is to say there were really few harbors to find safety from the economic storm, keeping in mind that even in stormy seas, a submarine is a okay place to be. So it is with the equity markets, everything was sinking — yet there was safety in shorting the markets, either via stocks or ETF’s that did this for you.

Now onto my personal investment style going into 2009. First of all throughout the fall of 2008 as the Market dropped I unloaded many mutual funds which I previously had considered long term holds and decided to go back to my roots as being more of a what is called a “swing” trader - that is to hold stocks or funds for perhaps on the average of slightly less than a month. I would still hold some long term funds, but these would be on the Conservative side, such as Permanent Portfolio (PRPFX) which lost in 2008, yet only about 8%. I’m also holding James Balanced Golden Rainbow (GLRBX) which dropped just over 5% in 2008. On the Moderate side, Oakmark Equity & Income (OAKBX) has been a long term favorite which lost just over 16% last year. Another Moderate Fund hold is FPA Crescent (FPACX), which although considered Moderate did lose about 20% last year. Finally a last Moderate Fund, which had a disappointing loss of over 27% last year is Leuthold Core Investment (LCORX). These combined 5 funds had an average loss of 14.5% last year, not to bad considering the average fund (as defined by the SP500 fund, VFINX) lost over 37% last year.

At the beginning of each year I also buy a group of 6 mutual funds to hold for one year. The screening process starts with mutual funds that are open to new investors and have no load or transaction fee charges. Then the funds have to be rated 4-star or 5-star funds by Morningstar. Then I add a screen which makes a final selection based on a 2-yr performance basis coupled with relative strength compared to other funds in each of the 6 categories. To start 2009 I selected the below 6 mutual funds, keeping in mind that my investment is relative small here and my main reason for this is to educate myself on the overall mutual fund market. Each fund is different in category (Large Cap, Small Cap, etc) plus style (Growth, Value, Blend) from each other. Here they are:

1. Large Cap Value - Amana Income (AMANX)

2. Large Cap Blend - ICON Income Opportunity I (IOCIX)

3. Mid Cap Growth - Needham Aggressive Growth (NEAGX)

4. Mid Cap Value - Ave Maria Rising Dividend (AVEDX) - interesting name

5. Small Cap Value - Intrepid Small Cap (ICMAX)

6. Artisan International Value (ARTKX)

These are not my total investment vehicles, as diversity in investment methods is just as important as diversity in fund categories, such as shown above. I’ll write about Mutual Fund, ETF and stock trading in future blogs.

Don

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