The Closed World Of Clos E De N D Funds

Closed-end stock funds, although popular during the 1980s, have slowly atrophied. Today, there are only 30 diversified domestic 9 Investors can search easily for funds that meet these expense hurdles by using the fund-screening tools at www.morningstar.com and http money. cnn.com. 10 See Matthew Morey, Rating the Raters An Investigation of Mutual Fund Rating Services Journal of Investment Consulting, vol. 5, no. 2, November December, 2002. While its star ratings are a weak predictor of future...

The Defensive Investor and Common Stocks

In our first edition (1949) we found it necessary at this point to insert a long exposition of the case for including a substantial common-stock component in all investment portfolios.* Common stocks were generally viewed as highly speculative and therefore unsafe they had declined fairly substantially from the high levels of 1946, but instead of attracting investors to them because of their reasonable prices, this fall had had the opposite effect of undermining confidence in equity securities....

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Sources Aronson + Johnson + Ortiz, L.P. www.wilshire.com Sources Aronson + Johnson + Ortiz, L.P. www.wilshire.com start-up firms, went up an astonishing 939.9 in 1999. Meanwhile, Berkshire Hathaway-the holding company through which Graham's greatest disciple, Warren Buffett, owns such Old Economy stalwarts as CocaCola, Gillette, and the Washington Post Co.-dropped by 24.9 .4 But then, as it so often does, the market had a sudden mood swing. Figure 8-1 offers a sampling of how the stinkers of...

Moving Beyond Uncle

Pooled together from thousands of mortgages around the United States, these bonds are issued by agencies like the Federal National Mortgage Association (Fannie Mae) or the Government National Mortgage Association (Ginnie Mae). However, they are not backed by the U.S. Treasury, so they sell at higher yields to reflect their greater risk. Mortgage bonds generally underperform when interest rates fall and bomb when rates rise. (Over the long run, those swings tend to even out...

Two Acronyms To The Rescue

Fortunately, you can bolster your defenses against inflation by branching out beyond stocks. Since Graham last wrote, two inflation-fighters have become widely available to investors REITs. Real Estate Investment Trusts, or REITs (pronounced reets), are companies that own and collect rent from commercial and residential properties.10 Bundled into real-estate mutual funds, REITs do a decent job of combating inflation. The best choice is Vanguard REIT Index Fund other relatively low-cost choices...

Commentary On Chapter

I feel grateful to the Milesian wench who, seeing the philosopher Thales continually spending his time in contemplation of the heavenly vault and always keeping his eyes raised upward, put something in his way to make him stumble, to warn him that it would be time to amuse his thoughts with things in the clouds when he had seen to those at his feet. Indeed she gave him or her good counsel, to look rather to himself than to the sky. In the glory days of the late 1990s, many investors chose to go...

Timing Is Nothing

In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy. From 1966 through late 2001, one study claimed, 1 held continuously in stocks would have grown to 11.71. But if you had gotten out of stocks right before the five worst days of each year, your original 1 would have grown to 987.12.1 Like most magical market ideas, this one is...

The First Shall Be Last

Why don't more winning funds stay winners The better a fund performs, the more obstacles its investors face Migrating managers. When a stock picker seems to have the Midas touch, everyone wants him-including rival fund companies. If you bought Transamerica Premier Equity Fund to cash in on the skills of Glen Bickerstaff, who gained 47.5 in 1997, you were quickly out of luck TCW snatched him away in mid-1998 to run its TCW Galileo Select Equities Fund, and the Transamerica fund lagged the market...