Marketpulse
The market’s extreme volatility this summer is a stark reminder of the importance of owning investments that can weather any storm. To the right we review the low-risk/hedged portion of Growth Portfolio—the eight holdings that as a group can be counted on to bring you through a multitude of potential woes, including deflation and inflation. We continue to recommend they make up a hefty chunk of your portfolio, more than 40 percent. During the summer’s…
FRONT PAGE
Outwitting a Wild Market: Versatile Hedges For Volatile Times
Yes, the market’s wild swings may seem scary. But you’ll do fine by following our formula of owning a solid group of hedges along with stocks poised to benefit from continuing global growth.
GROWTH PORTFOLIO
GE and Coke: Giants That Still Know How to Grow, Strong Stakes in Developing Markets Keep Profits on a Frisky Path
When it comes to growth investing, how big is too big? After all, whether you’re talking about a baby or a company, it’s axiomatic that it is far easier to grow rapidly when starting from a smaller base. This question is relevant to TCI growth investors, given that our Growth Portfolio contains some of the largest companies around. Indeed, a decade ago, a company with the heft of General Electric, the largest company in Growth Portfolio,…
INCOME PORTFOLIO
Our Safer Financial Plays: Citi, Wells Fargo, and Apollo Can Easily Weather the Mortgage Mess
The market’s turmoil, a reaction in part to accelerating liquidity problems stemming from woes in the subprime mortgage industry, has led us to closely review Income Portfolio’s three U.S.-based financial stocks—Citigroup, Wells Fargo, and Apollo Investment Corp.—to check on how vulnerable they might be. Our conclusion: all three, while not immune to market volatility or to the weaker part of the housing market, are sound investments going forward. Citigroup is the largest U.S. financial institution.…
FUNDFOLIO
Saying Good-Bye to Calamos: For Large-Cap Growth, Our Fidelity and Brandywine Funds Offer a Bit More
Recently, when Morningstar reclassified Calamos Growth fund—originally a mid-cap fund—as a large-cap entity (see TCI July 2007 issue), FundFolio suddenly had three large-cap growth funds. That’s too much of a good thing. After carefully considering the three funds, we are selling Calamos Growth and sticking with our two original picks: Fidelity Export and Multinational and Brandywine Blue. While Calamos Growth still has many positives, it was disappointing that when it still was a mid-cap fund its…
FUND FINDS
Delafield Antes Up on Cytec Industries: Superior Materials, and Now Margins Are Looking Up
FundFolio’s sole mid-value fund, Delafield, has been a consistently strong performer. Recently the fund added to its already large position in Cytec Industries, a $3 billion New Jersey-based specialty chemicals and materials company whose customers range from aerospace giants like Boeing and Airbus to major industrial producers to copper and aluminum miners. Revenues have been growing nicely but declining margins have been a problem. We see a turnaround in the offing as Cytec takes steps…
FAST TRACK
Fuel Tech: Clearing the Air: It Cuts Emissions, Improves the Efficiency of Burning Coal
The energy bill passed by the Senate earlier this summer sent one TCI recommendation—Exelon (Growth and Income Portfolios)—up 6 percent in a single session, thanks to provisions assuring the nuclear power industry billions of dollars in guaranteed loans. While the bill’s ultimate form and fate are uncertain—it must be reconciled with a House version, and President Bush has threatened a veto—some version is likely to go forward that will include new funding for a range…
SECTOR SENSE
The Dow's 30 Current Dogs: Updating the Theory, We Pick Two Stocks That Pay You Handsomely to Wait
In 1991, a money manager named Michael O’Higgins wrote an influential book called Beating the Dow in which he introduced an approach to investing built around owning the Dow Jones Industrial Average’s 10 highest-yielding stocks, dubbed the “Dogs of the Dow.” Under this system, you’d hold these stocks for a year and then check again to see which stocks still qualified—dumping any no longer among the 10 highest yielders and replacing them with the newest…
MARKET BITES
Market Bites
Rosier on Real Estate, Warmth Interruptus, Chindia, MasterKey
WHAT THEY'RE THINKING
Humphrey B. Neill: Classic Contrarian
“When everybody thinks alike, everyone is likely to be wrong.” That line appears on the very first page of Humphrey B. Neill’s classic book The Art of Contrary Thinking, published in 1954. It’s one of the most famous lines about investing ever written, and its sentiment still bears heeding today. Peering at crowd psychology through a sociological lens, Neill explored how mass psychology creates its own justification and how, when it reaches too high an extreme,…
SMALL CAP VALUE PORTFOLIO
Yes, We're Buying a Homebuilder: At Some Point the Now-Scorned Group Will Start to Rally on Bad News
Value investing, which by its very nature generally involves buying what no one else wants, requires both guts and patience. But if you have these qualities, you can be well rewarded for your foresight in scooping up shares of stocks that have fallen out of favor. Currently perhaps no group fits that bill as well as homebuilders. The housing sector is in a prolonged slump. Home prices are falling in many markets, and rising inventories…
