More misery may be lurking for mutual fund investors

The Ticker

September 25, 1998|By JULIUS WESTHEIMER

DO YOU WORRY about your mutual funds in this market?

"Fund investors have had a rough few months," says Business Week, "and if the market doesn't correct quickly, they will feel more miserable come December. Not only could funds continue to go south but fund holders will also get hit with heavy taxes on capital gains that funds paid shareholders."

"Don't bet on a sure thing. Avoid buying stocks that look certain to be big winners. Enthusiasm for high-fliers pushes prices to risky levels. On average, the 'most popular' stocks gained less than half as much as the S&P 500 from their popularity peaks through July 31, 1998." (H. Bradlee Perry, David L. Babson & Co.)

"While Asia stumbles and Latin America crumbles, Americans enjoy life. Consumers spend, their confidence fueled by rising wages, high employment and low interest rates. A clear beneficiary is the housing market. Our favorites: U.S. Homecare Corp., Centex Corp. and Beazer Homes, U.S.A." (Personal Finance.)

"If you have a strong portfolio that did well over the last few years, consider a well-run diversified international fund. The Templeton Group is perhaps the best-known and best-established." (Laszlo Birinyi, consultant.)

"This shakeout is not 1929, or 1973-'74, or even 1987. This is an adjustment of expectations of annual 15 to 20 percent gains to more reasonable expectations of 7 to 8 percent. Don't let 'em scare you out of stocks. Bear markets don't develop when there is liquidity, which the Federal Reserve is creating with low interest rates." (Kenneth Fisher, money manager, in Forbes.)

Pub Date: 9/25/98

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