June 9, 2009

And what a ride it has been since my last Welcome letter dated Oct. 5, 2008. It follows this one if you'd like to read it again.

Okay, just as there have been changes on Wall Street and in your investment portfolios you'll also find some here. For openers, Allan Lavine and Gail Lieberman are no longer contributing columnists. But, I have archived all that they've contributed for the past oh-so-many years. You'll find an archive link to them on the left column of the homepage.

New additions: Steve Schoepke, an old economist friend of mine, will be writing a commentary piece about mutual funds twice a month (hopefully). He's been in the financial services biz for over 25 years and is new to this writing biz which is why "hopefully" is in parenthesis.

I first met Steve in the late 1980s when he was working at Lipper and I was writing a weekly mutual fund column for The Miami Herald. His area of expertise is fund analysis and due diligence. He knows all the in depth nitty-gritty stuff about funds. Make sure to read his first piece about index funds. You'll learn something.

As for me, you've no doubt noticed that my contributions have moved from being only about mutual funds to money related. The change is because of, well, money. It's tight. And because there currently are no sponsors for this site, I've had to take on additional assignments to keep Allaboutfunds.com up and running.

People ask why I keep this site going when it isn't bringing in any money. My answer? First, I believe that I'm providing a service---one that helps fund investors learn more about the investments they have made in an educational and non-sales related environment.

Second, it's a passion in so far as I've an on-going interest in this subject that doesn't seem to die no matter what.

Knowing that, consider the following;

• Allaboutfunds.com went live in early March 1999. On March 29, 1999 the Dow Jones Industrial Average (DJIA) broke through 10,000 to close at 10,006.
• On May 3, 1999, the DJIA closed above 11,000.
• By August 23, 1999 that average had soared to a new high of 11,209.84.

Things change. And not always as we hoped, dreamed or wished for.

If history is any guide, the rally that we've seen in the market since early March (2009) probably won't be sustained. According to BlackRock's Weekly Investment Commentary from Bob Doll, Vice Chairman and Global CIO of Equities for the week of June 8, 2009:

"At present, we believe equities are entering a sideways correction phase, and we also expect to see ongoing levels of high volatility. We think it is extremely unlikely that prices will retreat back to their early-March levels, but we could see some modest near-term declines, since markets never move straight up. Typically, such corrections result in a give-back of between one-third to one-half of gains, which, should this occur, would result in a short-term drop to between 800 and 850 for the S&P 500 Index. Over the longer term, however, we expect improving economic conditions will help equity prices to move higher, and we believe that stocks will outperform bonds and cash over the next 12 months...."

The part about the market historically giving back one-third to one-half of its recent gains is worth remembering. Just as pigs don't fly, stocks don't recover in a straight line upwards.

And that's it for now except for this request: If you enjoy this site, I would appreciate it if each of you told five or 10 of your friends about Allaboutfunds.com and encourage them to visit. It really is a one-of-a-kind site offering weekly mutual fund performance figures along with Web site fund family addresses, toll-free fund family phone numbers and symbols for all funds all courtesy of Lipper. And more.

Thanks for your time...

All the Best,

Dian Vujovich
Questions? Comments? Inquire here.

October 5, 2008

There's an old Wall Street saying worth considering: "Don't try to catch a falling knife." Oh my, how very true.

No two ways about it, the investment situation today is very ugly. Then again, it's also full of opportunities. First, let's look at the ugly.

Lipper's mutual fund performance numbers for the third quarter and year-to date show that for the quarter ending Sept. 30, 2008, the total return on the average equity fund (they track13,126 of them) was down 12.57 percent. Year-to-date, off 21.24 percent.

The fund categories with the worst performance this year, (from Dec. 31, 2007 through Sept. 30, 2008) include: China region funds, down 43.70 percent; Pacific Ex-Japan funds, off 37.22 percent; emerging markets funds, down 36.64 percent; diversified leverage funds, off 32.12 percent; and international real estate funds, down 31.30 percent.

The best groups? Real estate funds, on average down 2.07 percent; equity market neutral funds, off 4.06 percent, commodities funds, down 7.99 percent; and health and biotech funds, off 8.56 percent.

If you're an S&P 500 index fund shareowner, expect your investment to be worth nearly 20 percent less (19.58 percent to be exact) as of Sept. 30 than it was on Day 1 of this year.

BTW, the only equity fund category showing a plus-side return is dedi cated short bias funds. Funds in that grouping were up on average 19.51 percent.

On the positive side of all of this mess is opportunity. Today there exist some wonderful investment opportunities for mutual fund managers with money to invest and for individuals with the same. As an individual knowing where or when to put your money to work, however, is the $700 billion dollar question.

That said, what should you do? For openers, as the adage reminds us, don't try to catch a falling knife. Let time decide whether you ought to sell your mutual fund shares or to make new purchases.

For example, those in their 20s, 30s and even early 40s have decades to go before tapping their investments. For that age group, consider the old rule-of-thumb that Ibbotson, a Chicago-based securities analytical firm, used to talk about. Basically it said that it takes 20 years for risk to be eliminated from the equity market. Translated, if you invest $5000 today and the markets bounce around in Crapola Land for the next two decades, 20 years from now you're investment will still be worth $5000. If there's a better reason for including a safe fixed-income component in your investment portfolio, I can't think of one.

Those in the 50s, 60s and beyond have time on there side, as well, but not as much of it. Consequently, this is where any advice giving gets sticky and is best done by putting a few heads together those of whom know precisely know what9 9s truly going on in your life.

No matter what the outcome of such a gathering of minds, remember cash is and always has been king. If you're just beginning to invest for your retirement and fall into the 50+ age group with say $25,000 or $50,000 put aside, looking at all of your investments---and debts---is paramount. Understanding your tolerance for risk is too. Make sure to take a long look at the current funds held in your IRAs, ROTH IRAs, 401 (k)s etc. to see where monies are invested and what performance is and has been for the last year or two. Changing them is always an option but don't do that in haste. Continuing to reinvest also a choice.

Bottom line: Nobody knows how the markets are going to perform going forward. Nobody---never have never will. But everybody knows having cash to spend or invest always makes sense no matter what's going on in the markets. So why not let this market provide the impetus for you to turn over a new leaf and, no matter what your age group or investment situation, begin to save like a squirrel getting ready for a long cold winter. Odds are we're in for one and having a fat, easy-to-tap savings nest egg held outside any formal retirement plan(s) will keep the worries of a falling knife at bay.

All the Best,