WSW: Louis Rukeyser's Wall Street Summary & Discussion $treet

» SteveT - 2-6-04

Nick Sargen said this weeks jobs report will keep the FED on hold for a little while longer. Nick recommends a very diversified strategy. Stocks he likes are Kimberly Clark (KMB), Tyco (TYCO), and Teva (TEVA).

Gretchen Lash thinks last years tax cuts will propel stronger consumer spending for the next couple Quarters. Business capital spending should increase as well due to accelerated depreciation. She think semiconductors and some tech are overvalued but using the FED model the broad market is still around 20% undervalued. Stocks Gretchen likes are Marsh & McLennan (MMC), Hewlett Packard (HPQ), and Amgen (AMGN).

Tom Gallagher talked about the interrelationship of the economy and politics in election years. He believes the jobs picture has to improve for President Bush to prevail this fall. Tom thinks the FED is fine tuning their message. The past 18 months they have been encouraging investors to take on more risk. This explains in part why the lower quality and high risk securities have outperformed. Gallagher believes going forward high quality stocks with predictable earnings and dividends will be market leaders. Stocks he likes are Northrop Grumman (NOC) and UTStarcom (UTSI).

Bill then introduced Charles Royce, Chief Investment Officer The Royce Funds. Chuck focuses on small cap stocks and has enjoyed the past three years. Saying small caps typically do well in a low return environment. He thinks a correction is coming soon and market leadership will shift to higher quality stocks. Stocks he likes now are Ritchie Brothers (RBA), Nuveen Investments (JNC), Kelly Services (KELYA), Keane (KEA), and Timberland (TBL).

Nick asked what a value oriented investor is to do these days. There are no deeply undervalued sectors so it is a stock by stock process. Nick then asked if as a shareholder of small caps Chuck tries to influence managements. Not really if they do something he don’t like he usually sells the stock. On occasion he will speak out on excess options or issuing a second class of stock. Gretchen asked if he looks for themes or in certain sectors. Royce looks for out of favor stocks so that could be his theme but mostly he looks stock by stock. Gretchen then asked about his sell discipline. It is primarily valuation but that is tricky and not always precise, currently he is selling some tech, lightening up as much as 50% from his recent peak in allocation. Tom asked if he spends a lot of time on research since not much is available on the stocks he owns and if that limits the number of companies he owns. He spends all most all his time on research and it is critical, this is how you find inefficiently priced stocks. Chuck also revealed he enjoys it. Tom then asked why non dividend payers were outperforming and if this would continue. It is a mystery, Royce thinks it will change and dividend payers will be stellar performers the next 2 or 3 years.

Bill followed up by asking if dividends are criteria for stock picking. Yes, Chuck looks for an ability to pay a dividend. Royce thinks the Mutual Fund scandal is largely behind us. It is a horrible example in an industry that had been clean. He can’t explain how those things could have taken place. He believes regulation will start the clean up, but it will be a self cleansing process.

Next weeks guest will be Vince Farrell, Chairman Victory Capital Management. The panel has yet to be named.

-- posted by SteveT

» Kirk - Re: 2-6-04: Chuck Royce - Royce Funds CIO

Boy, they hvae a fund for every occasion:

List of Funds: http://biz.yahoo.com/p/fam/royce.html

Royce Micro-Cap Inv (RYOTX) Small Blend
Total Expense Ratio: 1.49%

Royce Opportunity (RYPNX) Small Value
Total Expense Ratio: 1.17%

Royce Low-Priced Stock (RYLPX) Small Blend
Total Expense Ratio: 1.49%

Charts of Royce Small Cap funds vs the fund I've had my money in (for small cap value) since 1998, FLPSX. (I do my own stock picking for small cap growth... see my newsletter for examples).

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>

Royce Funds have put in some good results!

         PERIOD                Kirk  Wilshire5000  Delta
1 Year Return to 12-31-2003    +77%     +31%         46%  
3 Year Return to 12-31-2003    +25%      -7%         32%  
5 Year Return to 12-31-2003   +171%      +2%        169%  

 

Total Return:
                                  Kirk   S&P500+  NASDAQ 
5 Yrs 12/31/98 through 12/31/03  171.0%  ( 3.0%)  ( 8.6%)
Annualized Annual Return          22.1%  ( 0.6%)  ( 1.8%)
 
Click for a free issue of my newsletter 
Suitable for the aggressive growth part of your
  diversified investment portfolio. 

2004 YTD: As of 2/1/04 my newsletter portfolio is up 3.8% YTD vs. 2.9% for VFINX, Vanguard's S&P500 fund. My portfolio uses asset allocation and stock selection with a current allocation roughly 70% equities and 30% fixed income.

-- posted by Kirk

» SteveT - 2-13-04

Liz Ann Sonders thinks the market direction will be up this year but it will not be as easy as 2003 was. She expects some consolidation and volatility, which is healthy. For now the FED should be on hold but watching inflation, employment, and capacity utilization. Stocks Liz Ann likes now are Marathon Oil (MRO), United Technologies (UTX) Express Scripts (ESRX), and Intel (INTC).

Mary Farrell says fundamentals look terrific. She thinks 2005 could see a slowing economy and the market may reflect that the second half of this year. Over all the market over shot to the down side in 2002 and is now fairly valued. Still there are some bargains to be had. Stocks Mary likes are General Electric (GE), Coach (COH), and Pepsico (PEP).

Mike Holland is encouraged by the attitude of the proposed Comcast Disney deal. He doesn’t know if it will happen but says it signals a sense of value and a focus on future earnings returning to Wall Street. Holland believes the recovery will be global and we will see low inflation and rates continue. Stocks he likes are Schlumberger (SLB) or for those interested in more diversity Oil Service HOLDRS Trust (OIH). He also likes ExxonMobil (XOM) and ChevronTexaco (CVX). On an overvalued basis Mike would sell Sina Corp. (SINA).

Tyler then introduced Vince Farrell, Chairman Victory Capital Management. Vince was sanguine about Alan Greenspan’s remarks this week and thinks rates will remain low for sometime. He would be more worried if deficits continue to grow the next year or two. Last year lower quality stocks led the market and he thinks that will be transitioning to higher quality dividend payers leading the way. Farrell thinks the S&P 500 is due for a health restoring correction. We have moved from 800 to over 1100 without even a 5% correction. He thinks once complete a correction will set the stage for a better rest of 2004. Stocks Vince likes now are General Electric (GE), Microsoft (MSFT), and Pfizer (PFE).

Liz Ann asked him to pick an asset class that will be market leader this year. Large cap quality if he had to pick one. Last year many small caps that have had no earnings did well. But Vince warned not to get hung up on that. He advised take a look at the overall value. Look for dividends and increasing dividends. Look for companies that can benefit from a weak dollar. Liz Ann then wanted to know if the transition would be more apparent in the rallies or corrections. Vince said most of the time they take place in corrections and he expects that to be no different this time. He did say he could be wrong this time because of the tremendous liquidity of cash in money markets. Mary asked if he prefers foreign or U.S. markets. Vince shies away from foreign markets due to accounting concerns. He gets foreign exposure by investing in U.S. Large caps, some of which get as much as 60% of earnings overseas. Mary then asked for some advice to those with large cash holdings. Put in a little now and hope for some consolidation after which the market should do very well. Mike wanted to know what viewers should watch out for. Over exuberance on good names that have gotten too rich. The broad tech sector is trading at ten times sales, which is bubble level territory. Sometimes you just have to sell a good company due to over valuation. Mike then asked over the next four years will the surprise on inflation be up or will it remain low. Vince thinks the next surprise on inflation will be upward, but not soon. We still have excess capacity in the system. He thinks rates will inch up this year but that is OK. It signals the economy is doing well. Inflation fears are always a concern and he expects and that won’t change a few years from now.

Next weeks guest will be William Fries Portfolio manager Thornburg International Fund. The panel has yet to be named.

-- posted by SteveT

» SteveT - 2-20-04

Frank Cappiello expects a correction at some point but feels the bull has very strong legs. He says four factors will keep this bull going. They are; 1) the mood or high sentiment 2) money availability, there is $2 Million in money markets and some of that is bound to go into the market 3) Government spending and the weak Dollar 4) Mergers and the momentum that goes along with them. Frank likes Large Caps Home Depot (HD) and Marsh & McLennan (MMC)

Barbara Marcin thinks there is a broad range of values in the market now. She thinks as long as the economy is good earnings can grow for another year or two. Stocks she likes are Hewlett-Packard (HPQ), Citigroup (C), JP Morgan Chase (JPM), and Merck (MRK).

Lou Holland fears we are in another bubble. He says the NASDAQ is very expensive with a P/E about four times the growth rate. He believes the correction has started and more is coming. He thinks 2004 will show returns of about 6%-8%, which is decent. Holland does like the financial services sector with stocks like Hartford Financial Services (HIG), American International Group (AIG). He also likes Pfizer (PFE) and Kohl’s (KKS). Lou would sell any high priced NASDAQ stocks without earnings.

Sue introduced William Fries Portfolio manager Thornburg International Fund. Bill’s goal is to buy promising companies and buy them at a discount to intrinsic value. At the time of purchase a sell price target is established, usually at least 30% to 40% above the buy price. As the target approaches it is reevaluated. If nothing has changed his discipline takes over and the stock is sold. Stocks he likes now are HSBC Holdings (HBC) and CNOOC (CEO).

Frank asked if he is looking at or owns and stocks in India. Yes he owns Dr. Reddy's Laboratories (REDY.BO) and is looking at a couple more. Then Frank asked what it would do to the markets if the 10 year treasury yield rose to 5% or 5.5%. Bill does expect the FED to get it right and short term rates will rise slightly and that will have the desired affect. He believes long term rates won’t go that high. Barbara asked if Japan is finally going to see a sustained recovery. Fries thinks the excesses have pretty much worked through Japan and things will improve. Barbara then wanted to know if we will see more mergers overseas particularly in Europe. Yes, the Europeans have the advantages with their higher currency and we can expect Some European companies buying some American companies. Lou asked what are the chances outsourcing will cause enough deflation to be bad for financial stocks. Bill thinks we have reflated the system The Dollar performance and commodity prices indicate this is so. Fries thinks the FED will bump up rates sooner than most think. Also he thinks the ECB will lower their rates to stimulate and this will help stabilize our Dollar.


Next weeks guest will be Jeff Auxier Portfolio manager Auxier Focus Fund. The panel has yet to be named.

-- posted by SteveT

» SteveT - 2-27-04

Rich Bernstein says corporate profits are up 75% this year, the strongest in the post war period. Bernstein being the ever vigilant bear is worried what will happen when profit growth slows to 15% or 20% late this year. He thinks we will see a rotation to late cycle stocks and a flattening yield curve seems to confirm this. Stocks Rich likes now are Avon (AVP), Cinergy (CIN), Liz Claiborne (LIZ), and ExxonMobil (XOM).

Laszlo Birinyi thinks the market is waiting for the next piece of news. Until then he is play it safe, taking a defensive posture. Stocks Birinyi likes are SBC Communications (SBC), Countrywide Financial (CFC), and Newmont Mining (NEM).

Frank Gannon believes the market is “rotationed for floatation”. In other words he thinks the rotation is underway. Gannon predicts the consumer staples sector and Health care sectors will do well. He says the important thing to remember is the economy is in good shape and earnings this year are going to be quite good. Stocks Frank likes are Merck (MRK), ExxonMobil (XOM), and Merrill Lynch (MER).

Bill them introduced Jeff Auxier, Portfolio manager Auxier Focus Fund. Jeff is also a farmer and sees many parallels. Both require day to day hard work and plenty of patience. The key is not slacking off, knowing the facts, and acting rational. To Jeff value investing is looking at the stock market as a supermarket. He tries to identify what he wants and waits until “Double Coupon day” to buy. Typically this happens amidst doom and gloom. That is when looking at facts not news hype wins the day. He warns from time to time you do get a dose of humility. Stocks Auxier likes are Travelers (TAPa), First Health (FHCC), HCA (HCA) and Weight Watchers (WTW). He mentioned he owns these stocks but bought them cheaper than they are trading today. Also saying these are the types of companies that if they go down in price you buy more.

Rich asked about his sell discipline. One war story was Enron, which he sold at $82. At the time every brokerage house had a buy on it at $82. He looks at the business in its entirety. By digging into the 10-K he discovered how highly leveraged they were, with lots of off balance sheet activity. He doesn’t rely on a formula just the facts. Rich then asked about investing in China. Trade is exciting but Jeff worries about easy money. He quoted Warren Buffet “If money is easy grab your wallet and run the other way”. He sees lots of over subscribed IPO activity. When money is pouring in he gets nervous saying easy money destroys industries. He sighted Telecom and specifically fiber optics as examples. Laszlo asked if it is a disadvantage being away from large metropolitan areas. He doesn’t think so. When he started he called Warren Buffet who told him to get away from the media centers like New York. The emotions and follow the crowd behavior can be tempting. Jeff thinks having an even temperament is a big part of investing. Laszlo wanted to know his opinion of Disney. Auxier has owned it for a while. He is surprised by the whole media sector valuations. He went on to say 82% of mergers destroy shareholder value. He can’t believe we are going back to all these mergers again. He thinks cable bills are stretched so cash flow trouble is coming. When companies start using EBTIDA as a valuation metric that is worrisome. Frank asked for an opinion on the Bank One / JP Morgan Chase deal. Jeff likes Jamie Dimon saying with Financial Stocks high ethics and integrity is so important. On this one he is buying the management. Frank then wanted some comments on the recent Mutual Fund industry shenanigans. It is a shame. Jeff sees it as a privilege to handle other people’s money. His fund is set up so he can’t sell one share while he is managing the fund. He concluded by saying for him farming is great for his mental health, humility, and value system. He thinks that is more important.

Next weeks guest will be Francois Trahan Chief Investment strategist Bear Stearns. The panel will be John Kim, Brian Rogers, and Bob Stovall. Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT

» SteveT - 3-5-04

Tyler Mathisen filled in while Lou continues his recovery from back surgery. Tyler certainly had no shortage of subject matter for his opening remarks and touched on the top stories of the week. Among the items mentioned was the small gains in the market indices after a few rough weeks, the jobs report, and a late week bond rally. McDonalds is pulling out of the super size meal market, Intel lowered sales forecast, Michael Eisner, and Martha Stewart also made the financial news in the week just past. Tyler ended by saying ultimately facts are facts and shareholders must be listened to.

John Kim said the employment report was a shock to the marketplace. It brings into question are jobs ever going to come back? The economy, bull market and elections are on the line if job growth doesn’t increase. Productivity is helping company growth and has been a saving grace. Kim thinks productivity has peaked and is encouraged by the portion of the employment report concerning temporary help increases. He said this is often a leading indicator that permanent jobs will be increasing soon. Stocks John likes now are Corinthian College (COCO), Flextronics International (FLEX), Darden Restaurants (DRI). He would sell bonds and avoid Utilities.

Brian Rogers believes Alan Greenspan knows a whole lot more about the economy than he does. Rogers thinks Greenspan will notice that temporary employment moved upward and will also note Commercial and Industrial loan demand indicate job growth is getting closer. Stocks Brian likes are Lockheed Martin (LMT), Johnson & Johnson (JNJ), and Microsoft (MSFT).

Bob Stovall thinks the economic recovery has hit a flat spot and people are getting used to jobless prosperity. Things Stovall always watches are Interest rates, Inflation, and The Business cycle. All three point to higher stock prices, saying it is just a matter of time before equity prices begin moving up. Bob is going to be on the lookout for more corporate chicanery. He thinks when more cases reach verdicts it will help the market. Saying people feel good when someone that deserves it gets in trouble. He thinks dividends will be in vogue and likes Weyerhaeuser (WY), Apache Corp (APA), and Pitney Bowes (PBI).

Tyler then introduced special guest Francois Trahan, Chief Investment strategist Bear Stearns. A year ago Francois was a cautious bull and is even more cautious now. The things that made him bullish a year ago have played out. Now the market is overbought, valuations are no longer compelling, the equity cycle looks to be going sideways, and the economic cycle is showing signs of running out of steam. One indicator Trahan follows is ISM manufacturing index, which is just off a 20 year high and appears to be moving down. He believes this signals new market leadership. Investors should be focusing on high quality lower beta stocks with earnings stability. Stocks he likes now are Johnson & Johnson (JNJ), Hershey (HSY), and Dell (DELL).

John wanted to know about any themes for tech stocks. What worked last year won’t this year. Stay away from semiconductors and it looks like software will perform better. John also asked what interest rates will do by year-end. Trahan is more constructive on bonds than most people. He thinks employment will be sluggish for a while and the FED will be on hold and rates shouldn’t rise significantly in the near term. Brian asked about individual investor psychology and more money going from money markets into equities and if there are any signs that was gong to change. Most bullish indicators are at decade highs. There is too much optimism out there. Brian then asked which area will do better going forward large or small caps. Francois expects the small cp dominance to end and large cap quality to lead the way. Bob asked how to play the dollar weakness. That may have played out, the Dollar has started to rebound the past few weeks. Now he expects non cyclicals to benefit. Bob then asked if the shift to large cap quality would be quick or a long process. The trend should last 12- 18 months. Trahan expects Utilities, Health care, and Staples to be the leaders by years end.

Francois closed by expanding on his ISM manufacturing index ideas. He said think of it as a gauge on cyclical or high beta stocks. When ISM is low and depressed is the time to buy high beta stocks.

Next weeks guest will be Christopher Davis, Portfolio Manager, Davis New York Venture Fund. The panel will be Ed Brown, Elizabeth Dater, and Kim Goodwin. Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT

» Kirk - Re: 3-5-04: special guest Francois Trahan

Thanks Steve

"Tyler then introduced special guest Francois Trahan, Chief Investment strategist Bear Stearns. A year ago Francois was a cautious bull and is even more cautious now. The things that made him bullish a year ago have played out. Now the market is overbought, valuations are no longer compelling, the equity cycle looks to be going sideways, and the economic cycle is showing signs of running out of steam. One indicator Trahan follows is ISM manufacturing index, which is just off a 20 year high and appears to be moving down. He believes this signals new market leadership. Investors should be focusing on high quality lower beta stocks with earnings stability. Stocks he likes now are Johnson & Johnson (JNJ), Hershey (HSY), and Dell (DELL).

Lets see how these play out over the next year.

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

<img src=http://cbs.marketwatch.com/charts/int-ad... height=366>

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

He also said :Stay away from semiconductors and it looks like software will perform better.

<img src=http://cbs.marketwatch.com/charts/int-ad... width=452 height=366>

I find it interesting that he recommends Dell, a major consumer of semiconductors, but not MSFT a leading software company. I’ll bet LRCX outperforms Dell over the next 12 months… but you have to take profits if you get a 50% gain to lock in the gain.

-- posted by Kirk

» SteveT - 3-12-04

Kim Goodwin says the market has undergone some compression due to many macro factors. A rotation is taking place were companies with good earnings will do well and a rising tide will not lift all boats. Kim likes companies that have been beating earnings estimates. Some of he favorites now are EOG Resources (EOG), Sherwin Williams (SHW), and Charles River Laboratories (CRL). She would avoid the retail foods sector citing too much competition.

Ed Brown says now the key is to find companies that will not disappoint on earnings, those that do will have awful results. Ed is positive on the markets in the coming months but says the shorter term is difficult to tell. He doesn’t think a sell off is any big surprise after the strong year we had. Brown recommends investors be at 85% to 90% of their own equity allocation. Stocks Ed likes now are consistent earnings growers and priced reasonable. Some of them are Fiserv (FISV), Harley Davidson (HDI), and Career Education Corp (CECO). Ed would avoid cyclicals that had a good run and long term bonds.

Elizabeth Dater say the market is correcting as expected after we have enjoyed the past year. The economy is fragile and is giving conflicting numbers. Commodity prices are up while on the other hand the FED is unwilling to raise rates indicating no boom any time soon. There is no clarity on the economic picture. For Beth the big question is will the economy be sustainable going forward. Dater likes high growth companies with unique products. Some of them are Medicis Pharmaceuticals (MRX), Watson Pharmaceuticals (WPI), and Zebra Technologies (ZBRA). She is avoiding smaller enterprise software companies and the lesser quality Biotech companies.

Maria then introduced special guest Christopher Davis, Portfolio Manager, Davis New York Venture Fund. Chris takes an old fashion approach to stock selection. He looks to be an owner for five years or more so lots of research is required in advance of purchase. He looks for fundamentals that will endure, sound managements, and very good long term growth prospects. Davis is careful not to over pay for a stock. Saying “A great business can be a lousy investment if you over pay”. Chris agrees with Beth about the economy being fragile. Saying when sentiment is high complacency can be broken at a moments notice. I thought our guest gave a very good tip saying The unexpected will happen, durable stocks are those you are willing to hold and add to in uncertain times. A couple that fit that bill for Davis are American Express (AXP) and Altria Group (MO).

Kim asked about his sell discipline and what he is avoiding now. Chris didn’t speak to his sell discipline but is avoiding the supermarkets saying they are at a competitive disadvantage. Kim then asked what is the longest period of time he looked at an investment before deciding to buy it. There are many companies he would love to own at the right price. He follows it waiting for bad news. He bought Costco after five years when it fell 12 points on a bad quarterly report. Ed said Chris has some interesting ideas on investing in a risky area indirectly and asked for examples. Davis knew the Internet was going to grow and be widely used but thought direct investing to risky and down right speculative. He bought American Express partly because Internet purchases don’t take cash. Shipping companies would be another way to play the Internet indirectly. Many people are talking about investing in China. That has governance concerns, he mentioned AIG was founded in China in 1919 and has 30,000 agents in China selling insurance today as a way to play China. These are not pure plays buy are less risky too. Beth asked if he gauged his results on an absolute return or relative to an Index. He looks at long periods of time relative to the S&P 500 but only because he thinks that will achieve attractive absolute returns over time.

Maria wanted to know what other trends were on the horizon. Warren Buffet is concerned about the long term prospects of the Dollar and Davis agrees with that. He tends to be drawn to global companies, saying 95% of the world population lives outside the U.S. This can also help hedge currency. Maria asked what are the implications for a weaker Dollar. It will be bad for interest rates and P/E ratios. Davis thinks it is dangerous to own a business that would be hurt by a weaker Dollar.

Next weeks guest will be Richard Aster, Portfolio manager Meridian Funds. The panel will be Alison Deans, Tom Gallagher, and Nick Sargen. Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT

» Kirk - Re: 3-12-04: Davis New York Venture Fund Class A

Impressive 10 year rolling return chart on his "Idea sheet" that helps his sales force sell Class A shares.

The listed returns are far better in the past then they have been in recent years. It seems the grandson, Chris, manages to beat the S&P500, but not enough to overcome expenses.

From http://finance.yahoo.com/q/pr?s=NYVTX
Christopher C. Davis
Lead Manager since 01-Oct-95

Davis is a Vice Chairman with Davis Selected Advisers L.P., his employer since 1990. He has more than 10 years experience in securities analysis. His investment approach has been strongly influenced by working closely with veteran investor Shelby Davis.

1, 3, 5, 10, 15, 20, 25 and 30 year returns vs the S&P500 with and without the sales charge Winter 2004 Review

Interesting that the sales charge for NYVTX causes underperformance for every time period listed!!!!

A better comparison would be to the Wilshire5000 which I believe has out performed slightly the S&P500 in recent years.

Bottom line, if you can get the fund without the sales load, then it seems a good choice for a core fund, but an investment in the total stock market via VTI or VTSMX has outperformed when you consider sales charges. Lets thank Jack Bogle for pushing to make it a requirement for funds to report returns net of ALL expenses.

He also lists Class B shares. Those have back end loads and higher annual expenses that pay the sales load over a period of years then they SHOULD convert to class A shares with no load.

A list of Davis Funds
http://biz.yahoo.com/p/fam/davis_funds.h...

http://finance.yahoo.com/q/pr?s=NYVTX

Total Expense Ratio: 0.95%
Max 12b1 Fee: 0.25%
(People should be in jail for charging share holders to advertise to get more shareholders)
Max Front End Sales Load: 4.75%

My recommendation is only buy this fund as a core fund IF you can get it in your IRA without the sales charges. That is get the lower expense Class A shares without a front end load. I still worry about the 12b-1 fee and nearly 0.95% annual expense ratio. Even if you can get it for no load, I'd rather get a no load fund from Fidelity that has better long term performance...(I use Fidelity Contra for one of my core mutual funds that covers large cap and I use FLPSX for small cap as I split my money between active and passive management… ). I believe all Fidelity funds are no load but they were giving larger accounts (over $100,000) these funds for no load at least since 1998 when I transferred my 401K money into a rollover IRA there with no loads for any of their funds.

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>
<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>
I wonder if Rukeyser will ever get Joel C. Tillinghast, FLPSX Lead Manager since 27-Dec-89!

More fund info http://www.quicken.com/investments/backg...

I am quite fond of the "Core and explore" approach to investing where what you do with 10 or 20% of the "explore" part of your portfolio might be considered market timing. I don't quibble this as I am the first to admit that what I do is not "couch potato portfolio" material. But, I do have significant assets allocated along the 4x25 type strategy explained by Paul Farrell in The Lazy Person's Guide to Investing.

I recommend people use a portfolio from Farrell's book for 80 to 90% of their "core" investments. Then use the other 10 to 20% to "explore" with techniques such as market timing or following my newsletter. If they are any good with their "explore investing" and they continue to allocate new monies 80:20 Core:explore, then the explore will grow faster than the explore. If not, then the under performance is not a large part of your net worth.

         PERIOD                Kirk  Wilshire5000  Delta
1 Year Return to 12-31-2003    +77%     +31%         46%  
3 Year Return to 12-31-2003    +25%      -7%         32%  
5 Year Return to 12-31-2003   +171%      +2%        169%  

 

Total Return:
                                  Kirk   S&P500+  NASDAQ 
5 Yrs 12/31/98 through 12/31/03  171.0%  ( 3.0%)  ( 8.6%)
Annualized Annual Return          22.1%  ( 0.6%)  ( 1.8%)
 
Click for a free issue of my newsletter 
Suitable for the aggressive growth part of your
  diversified investment portfolio. 

-- posted by Kirk

» SteveT - 3-19-04

Lou continues to recover, again Maria Bartiromo filled in. Major headlines this week were fears of further terrorism, inflation fears, and oil prices reaching lofty levels. With all this fear around is it any wonder the markets had a down week? Maybe the best news of the week came when the FED left rates unchanged and in their statement said they could be patient regarding increasing rates.

Nick Sargen is seeing a rotation or flight to quality. Investors are showing more caution than a year ago when valuations were much lower. People are feeling more cautious due to the economy and mostly the jobs situation. This is a reminder that the market is not without risk. For all that is going on Nick says the economy is still growing and so are earnings. Sargen thinks now is a time to trade up to quality stocks like ExxonMobil (XOM), First Data (FDC), and Diageo (DEO).

Alison Deans says fundamentals are relatively strong. Valuations are stretched so she likes companies that can grow earnings and is not going to rely on an expanding P/E. She likes strong balance sheets and liquidity as added security from rapid price declines. Stocks Alison likes now are American Express (AXP), Staples (SPLS), and Comcast (CMCSK).

Tom Gallagher noted the market rallied late Thursday when it was announced al-Qaida # 2 man Ayman al Zawahri may be cornered in Pakistan but the rally faded late Friday since it was not clear it was true and people didn’t want to go into the weekend not knowing. Tom said for the most part politics doesn’t affect the stock markets until after Labor Day. Conventional wisdom says a Bush win would help equities and a Kerry win would help bonds. Gallagher thinks both are a bit much. Who ever is in the White House is not a reason to be in or out of stocks. But it may determine what kinds of stocks you want to own. Right now Tom is not bearish on bonds, saying they belong as part of a balanced portfolio.

Maria then introduced Richard Aster, Portfolio manager Meridian Funds. Rich avoided Tech and Telecom in the late 90s bubble period because he thought those companies would never be able to grow into the valuations they were receiving at the time. For Aster stock selection has no magic formula, it is an on going process and lots of work. He monitors up to 200 companies that have growth prospects for 5 years or more. He finds by being patient you often get opportunities to buy them at reasonable valuations. Stocks he likes now are in Healthcare but not because of the sector but are specific stock picks. They are Province Healthcare (PRV) and Lifepoint Hospitals (LPNT).

Nick asked if Rich pays any attention to macroeconomics or the political climate. Subconsciously maybe but he tries to avoid that. He is a bottoms up kind of guy. Nick then asked with 50 companies typically in his funds how he avoids volatility. He has an average holding period of three years. Valuation is one key to excessive volatility. The big key is allocation. If his goal is for a stock to be 2% of the fund and it rises to 4% he trims it back to 2% or 2.5%. Conversely if it goes to 1% and still looks good he buys it back up to 2%. This has helped his performance over the years and reduces risk. Alison asked if he is finding opportunities out side of Tech and Healthcare. Yes, one he owns and would buy now is Mercury General (MCY). Alison then asked what makes Aster sell a position outright. Long term fundamentals deteriorating or extreme over valuation. Tom asked which style has better prospects over the next year or so, growth or value. It is a toss up both look OK. Tom then asked for a view on the energy sector. Rich would not be buying any time oil is over $30 a barrel. He said it is like they see you coming.

-- posted by SteveT