SEE THIS SLIDE SHOW: The Best Stocks and Funds
CGM Focus (CGMFX)
When the stock market turns around, chances are that CGM Focus will be at the head of the pack. Manager Ken Heebner, who has been managing funds since the 1970s, is terrific at identifying themes and picking stocks that will benefit. He holds only about 35 stocks, trades feverishly and often sells short. Although Focus is down 43% this year to October 13, it returned 24% annualized over the past decade.
The Boston-based giant, best known for its mutual funds, is no slouch when it comes to brokerage, either. Fidelity offers excellent research and a wide variety of investment choices (if you're shell shocked by the stock market's collapse, check out the wonderful bond marketplace at Fidelity.com). The Web site is friendly, customer service is top-notch, and Fidelity's commissions are fair in light of all you get.
Grizzly Short (GRZZX)
When stocks stumble on the way up, bear-market funds, which bet on stocks losing value, can help ease the pain. Grizzly Short runs stocks through computer models to decide which ones to sell short, aiming to profit on a three- to four-month price drop. The fund has gorged on recent market pain, returning a whopping 83% over the past year to October 13, compared with Standard & Poor's 500-stock index's 38% loss.
Amana Growth (AMAGX)
Start investing in this top fund with just $250. Manager Nicholas Kaiser invests in large, growing companies that pass muster on Islamic principles, ruling out those that profit from alcohol, tobacco, gambling, or borrowing or lending money. Those restrictions have insulated the fund from the carnage in the financial sector. The fund gained 8% annualized over the past five years to October 13, trouncing the S&P 500 by an average of nine percentage points per year. Year-to-date to October 13, the fund lost 29%.
STOCK TO PUT AWAY AND FORGET
Procter & Gamble (PG)
With a stock-market value of $188 billion in mid October, the hugely diversified consumer-products company owns nearly 100 different brands -- from Gillette razors to Pringles potato chips. Over the past ten years to October 13, the Cincinnati firm has churned out 11% annualized earnings growth, and the shares have returned 6.5% a year.
STOCK FUND TO WEATHER A TURBULENT MARKET
T. Rowe Price Capital Appreciation (PRWCX)
No matter what the market has done since Capital Appreciation opened in 1986, this fund has stuck to its disciplined value strategy and stayed in the black every year except 1990. The latest streak may end this year; to October 13, the fund surrendered 28%. But Capital Appreciation, which typically holds two-thirds of its assets in stocks and the rest in cash, bonds and convertible securities, has returned 10% annualized since its inception. It even managed to gain 24% during the calamitous 2000Ð02 bear market.
Bruce Berkowitz and his team have delivered the goods since the launch of this concentrated fund in December 1999. From its inception to October 13, Fairholme has gained 11% annualized, beating the S&P 500 by 15 percentage points a year. Berkowitz focuses on companies that generate cash flow, and this year the fund has taken a large position in several health-care companies, including Pfizer. Fairholme lost 28% in 2008 to October 13, but it avoided the debacle in financial stocks.
WAY TO BET AGAINST BONDS
ProShares UltraShort Lehman 7-10 Year Treasury (PST)
Spooked investors have been piling into Treasury bonds, pushing their prices up and their yields down. As a result, the ten-year Treasury yielded just 3.9% in mid October. Meanwhile, consumer prices climbed 5.4% over the past year, making 3.9% look especially paltry. Eventually, yields will rise. The ProShares exchange-traded fund is designed to provide twice the inverse return of the Lehman index in its name.
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