Best gurus use unique formulas for hefty profits

July 20, 1994|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Investment gurus are for the birds.

That's because anyone who lays claim to holding the only true answers at all times is simply tossing around a lot of, well, birdseed.

There are many ways to beat a troubled stock market, and a shrewd investor does best by listening to numerous voices before making decisions.

Top-performing investment letters of the past 12 months excelled by employing unique strategies to bring subscribers in ahead of the pack. One overachiever temporarily tossed money into gold-oriented mutual funds, while another bought stock on margin.

Other paths to glory were single-country closed-end funds and stock of entrepreneurial small companies. In another instance, a diversified mix of mutual funds did the trick.

"If there really was only one road to investment success, everyone would be packed on it," observed Mark Hulbert, editor of the Alexandria, Va.-based Hulbert Financial Digest, which ranks the portfolio performance of investment letters using an imaginary $10,000 portfolio.

Winners are flexible, adapting their formulas to changing conditions.

Bearish market timer Peter Eliades, editor of Stockmarket Cycles, got in and out of Fidelity Select Precious Metals Fund and Fidelity Select Gold Fund to catch an uptick in gold prices. It worked. His 39.30 percent gain over the past 12 months ranks first among newsletters.

"Right now, I'm being careful and have my entire portfolio in money market funds," explained Eliades. "On the positive side, however, I think we'll see a buying opportunity late this year or early 1995 and I'd then put money in Rydex Ursa Fund."

Rydex is a Bethesda, Md., fund whose use of stock index futures and options on futures intensifies upward or downward market movement.

The fully margined stock portfolio of Al Frank, editor of the Prudent Speculator, rose 30.60 percent to notch second place as he put together what he refers to as his "usual grab bag of cats and dogs."

"This is a normal correction year, but I still expect the Dow Jones industrial average to finish the year up, at 4,000 to 4,200," predicted Frank. "However, investors and speculators must take multiyear outlook."

Frank likes the Big Three carmakers; brokers Bear Stearns Cos., PaineWebber Inc. and Raymond James Financial; technology firms Western Digital and Intel Corp.; and homebuilder Kaufman & Broad.

The third-place Mutual Fund Technical Trader, edited by Stephen Parker, gained 21.90 percent with closed-end funds specializing in emerging markets, but has lately shifted around after many of those tanked. He's moved into closed-end India Growth Fund as a volatile two-year selection with growth potential. Closed-end European Warrant Fund and open-end growth fund Twentieth Century Ultra are other favorites.

"I'm worried about political unrest in the Pacific Basin and don't -- consider China as opportune as I once did," warned Parker.

Good old-fashioned stock-picking helped Equities Special Situations to a 17.30 percent gain and fourth-place ranking for the 12-month period. Big gainers were clever, small firms Identix Inc., Williams Controls and Pages Inc.

"I'm still bullish because I've never seen so many fine, profitable entrepreneurial companies, though I do sell stocks now when they reach our target prices," explained editor Robert Flaherty, whose latest picks are Supreme International in apparel and Norwood Promotional Products in advertising specialty items.

Emphasis on small-company growth funds led the No-Load Fund Analyst to a solid 16.60 percent gain over the past year. Lately, editor Ken Gregory has moved toward larger- company growth funds and attractively priced emerging markets funds.

"There could be more downside in the market, but this is a correction, not an extended bear market, and losses will be recouped over the next 12 months," predicted Gregory, who now likes Vanguard U.S. Growth Fund; Tweedy, Browne Global Value Fund; and Scudder Emerging Markets Income Fund.

Following are annual subscription rates and phone numbers for the newsletters:

RTC Stockmarket Cycles, $252 for 18 issues (on special for $198 during July), 800-888-4351; Prudent Speculator, $175 for 12 issues, 310-587-2410; Mutual Fund Technical Trader, $139 for 12 issues, 802-658-5500; Equities Special Situations, $150 for 12 issues, 800-237-8400; and No-Load Fund Analyst, $195 for 12 issues, 510-254-8999.

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