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Show DAILY HERALD Sunday, April 6, 2008 C7 THE WALL STREET JOURNAL The jVeekly Guide to Managing Your Money ' 6 Company, . y Forthright shareholder industrials fell 7.6 in the period, their worst quarter in more than five years. That said, not all managers see i compelling case to put more dollars into stocks now. For instance, in December, FPA Capital Fund manager Robert Rodriguez declared a freeze on buying stocks. In a Jan. 22 letter to shareholders, he said he wanted to "convey the urgency and the importance of this credit crisis" to them, but noted he continues to review his hold each week. Six fund managers whose shareholder reports are among the favorites of Morningstar analyst Jim Sinegal Martin Whitman Third Avenue Value (TAVFX) Mason Hawkins & Average total return of U S. diver-- ; sified stock mutual funds, by quarter 'MS 0 ' l-ll- ll.-, Bill Miller -- 5 Legg Mason Value (LMVTX) -- 10' Mario Gabelfi -- 2006 Source Upper a markets, time when the stocks of mutu- analyst at the firm. Owning Up For instance, "actually owning up to their mistakes and saying 1 screwed up and shouldn't have bought this stock'...is a healthy and honest exercise," Some managers use their reports to discuss individual stocks in detail. Martin Whitman of Third Avenue Value Fund used his Jan. 31 letter to defend his buy of battered bond insurer MBIA and to dismiss one hedge-fun- d dire analysis of manager's MBIA's finances as "off base" and "amateur hour." A year-en- d report from the Ariel funds declared that the ugly market had created "terrific buying opportunities for those who maintain a cool and rational head." One example given: Ariel managers purchased shares of auction house Sotheby's in November when the stock fell 28 in one day following a disappointing sale of Impressionist and modern art. That was "a great buying opportunity," they wrote. Since then, Sotheby's stock has slid further. While declining to say if Ariel managers have bought even more shares, fund manager Charles Bobrinskoy said last week that his firm is now the largest outside inves tor in Sotheby's. firms themselves will clearly benefit if such advice keeps investors from bailing out of funds. But that can also be a good thing for individual investors: Too often, people rush into the stock market only after shares have soared in price and then rush for the exits when they tumble. OUARTERL Invest- Y ment specialists say consumers who are quick to quality buy sale merchandise at panies the local mall be purchased REPORT often aren't for a song." More fund coverage inside to In a re willing cent report, buy stocks and stock funds when they simiRon Baron of the Baron funds stressed patience, noting that larly go on sale. And stocks and stock funds stocks typically perform well after periodic financial crises. certainly saw prices go down in growth com- could SPECIAL through 2005 and which has been a big holder of battered Countrywide. His Feb. 10 letter to investors began this way: "This commentary will be short and to the point: We had a bad 2007, which followed a bad 2006." customers-sa- ys Stock Watch MUTUAL FUNDS 500-stoc- years : lar...,' " Mr. Baron wrote. commentaries to encourage investors to put more money into the stock market before prices rebound. Just last week, Daniel Chung and Zachary Karabell, the chief executive and chief economist behind the Alger funds, made a strong pitch in a monthly essay: "We firmly believe that years from now, the present will be seen as one of the great 'if only Miller, whose Legg Mason Value Trust beat the Standard k & Poor's" index in 15 straight '08 2007 Ariel (ARGFX) ar 1 .. . 15 L. John Rogers that mortgage lender Countrywide Financial was "more we realized." They say they "owned too much of it for too long" before selling in the fourth quarter. Another manager acknowledging poor results is Bill i. . stock-purcha- Gabelli Asset (GABAX) she says. Wallace Weitz and Bradley Hinton of the Weitz stock funds wrote in their year-en- d report that they "were positioned squarely on the wrong side of the 2007 market" While trying to bet on companies that could take advantage of a credit crisis, the Weitz managers found . .. 5 Christopher Browne etal. Tweedy, Browne Value (TWEBX) com- Laura Lutton, a senior , Staley Cates Longleaf Partners (LLPFX) munication is one thing Morn-ingstconsiders when it assigns "stewardship" grades to funds.' That's one way funds "treat shareholders like owners" which they are legally, rather than just Inc. All Rights Reserved. Dow wortnKeaaing October, mutual-fun- d investors have more reason than usual to read their funds' shareholder reports and seek other commentary from managers to whom they've entrusted their savings, If you're thinking of bailing out of a fund because of its recent losses or you're trying to select a fund in which to pump more dollars in anticipation of a market rebound-y- ou may be ' able to glean insights into how the managers view the investing environment and have positioned their portfolios. Managers' commentary on their recent losses may give you more comfort or less about continuing to rely on those individuals. Meanwhile, some investors even scour the reports of successful fund managers for ideas of stocks to buy. To be sure, plenty of managers' letters are heavy on financial jargon and not particularly revealing. But there are also managers whose reports are creative, colorful and consistently informative, al-fund Jones Dollars for HD Losers Banjo ith the Dow Jones In- dustrial Average down U from its record in W 2008 Dow comSunday ur Pteek Int() By Sheixy WSJ. An Of Only Market? Numerous managers have used recent letters and market the recently ended first quarter: Only two of 31 categories of U.S.- - and foreign-stoc- k mutual funds tracked by Morningstar eked out positive returns. The "Although it doesn't always seem that way, as Annie famously remarked so many years ago, "The sun'll come out tomorrow...bet your bottom dol- - you plop down big for a DVD player using Toshiba's re HD DVD format-wh- ich cently .lost the battle with Soformat? ny's Blu-ra-y Well, depending where you bought it, you may be eligible for a refund or a gift card to ease the disappointment. Did Wal-Ma- rt TIP OF Stores is ing refunds for K HD DVD players after Nov. 1. on or purchased To qualify, customers must return the players by April 30 and have a receipt in hand. Original packaging isn't required. Meanwhile, Best Buy is giving $50 gift cards to customers who bought an HD DVD player or an HD pVD unit for a Microsoft Xbox 360 videogame system anytime before d Feb. 23. recipients can keep their HD DVD units. Best Buy says it will mail the gift cards, which don't expire, by May 1 to customers who bought warranties or who are part of its "Reward Zone" program. Other Best Buy customers can call to participate. Be sure to have your receipt information as or credit-car- d Gift-car- proof of purchase. People looking to get rid of a player altogether-regardl- ess of where it was purchasedcan check out Best Buy's online trade-i- n center. You're not looking at great prices when trading in, hut it's something. For instance, you'd get $148.50 for a Toshiba HD XA2 unit originally priced at $1,000, and $2.70 apiece for HD DVDs. By Emily Green Email: forum.sunday03(3wsj.com INVESTOR'S CALENDAR GETTING GOING , ' THIS WEEK piNTHE MARKET Plt2 L.'SS; J.R MorMorgan, about stake to gan's 45. ; , i.. ; Wall Street Journal Sunday writers r regularly contribute to the Journals weekday "Your Money Matters' ' i . i personai-nnaiK- I D e I ft pouLdiL JJsten af WSiconVPodcasts 18.. ..16. i . . VT T Earnings Season: Aluminum manufacturer Alcoa, typically One Of the first large COmpa- nies to report earnings, releases figures ... "V a'g'aV - Mar ' respectively. Schering Cutbacks: Schering-Pmoved to cut $L5 billion in costs after a call by leading cardiologists to curtail the use of its cholesterol drugs Vytorin and Zetia. The H' Word: Federal Reserve Chairman Ben Bernanke said for the first time that the U.S. could enter a recession $100, down from $1,000. this year. Airline .Safety: New inspec- tions of Boeing 737 planes or- dered by government aviation regulators begin Thursday. Airline Pain: Indianapolis-base- d ATA Airlines filed for bankruptcy-la- protection and grounded its planes. LAST WEEK Stocks Rise: The Dow Jones Industrial Average climbed 3.2 last week and the Nas- - ' is a moment for prose and lofty But instead, you'll have to settle for another of my lists. In eight days, I start work as director of financial education for a new Wall Street advisory service This geared toward ordinary investors. That means this is my last column for The Wall Street Journal Sunday-a- nd, I've got to tell you, I'm feeling the pressure. What should I say in these remaining 800 words? How can I keep you on track in the years ahead? Here, culled from my two decades as a personal-financ- e writer, are eight simple suggestions. lough Treasurys for Less: As of Monday, the Treasury Department will sell its debt securities in minimum sums of i i 3V1 April daq Composite Index rose 4.9. For the year to date, they are down 4.9 and 10.6, re- Morgan Stanley Meeting: After reporting its first quarterly loss ever in the fourth quarter, Morgan Stanley holds its annual meeting Thursday. ., Sotiiw WSJ Market Data 6roup I first-quart- er Monday. General Electric ports Friday. ; ' 2 , ' company's big . . Jonathan Clements And It All Comes Down to This... WITHDMWAL PAINS: Schering- -' , Getting Closer: J.P. Morgan f Chaseurchase of Bear Stearns moves closer to com. Pletionwith Bear Stearns ks- u- fuse of the mg 95 mjhon shares to J.P. choiestero - By Music Deal: MySpace unveiled an online music service with three major record firms. 1 Embrace humility. Yes, there will always be investment icons like War- ren Buffett, who are celebrated for their market-beatin- g prowess. But what's re-al- ly striking is how few Warren Buffetts there are. Over a lifetime of investing, extraordinarily few investors outperform the market averages and, indeed, most lag far behind. Contemplating a big investment bet? Never forget that when you're buying, somebody's selling and he or she may be a professional money manager with a business degree, a computer and access to the latest market research. high-power- THEWmSTREETJOURNAL Lawrence Rout, PaulD.Bcll Vice President, Partner Buiinatts Paul.BelldowjonM.com MaH( Pope Director, The Journal Report ' ' David Crook, Editor David.Crookwqj.coro 6 Karen Damalo, Special Projects (2121597-586- New$ Editor Karen.Damatowqj.com 8 Mark Tyner, Muk.PopHsdowjonM.com Art Director Mark.Tynerwqj.com Steven A, Townsley 0 Teiephon (609) kma1u 6undav03ww.com 4300 Ron 1 North South Brunswick, N.J. 08852 Director 0 Sola (212)597-573- 3 Stcvtn.Towrmleyglowjon,com ' Corporate HkaWartou For a Spkial Journal Subscription Offer, Call: 200 liberty Street New York. N.Y. 10281 ' All of tks mlVs edition c wailable on our free Web site : WU.comStmday , ri Save yourself. Maybe most important, control your spending. During my 13'2 years as the Journal's al-finance columnist, I have corresponded with thousands of ordinary folks e who have amassed portfolios. Some were savvy investors. But almost all were diligent savers. To be sure, socking away money can be a frustrating business. At first, 7 3 person- - savings-a- nd suddenly will hp you nn you're carrying a credit-carbalance costing 13, it doesn't make sense to stick ' your extra cash in a savings If half account earning your money is in bonds yielding you shouldn't bank on 10 portfolio returns. In addition, think about the link between your finances and the rest of your life. If you're saving dutiretirefully for a ment, you should probably exercise, so your body lasts almost as long. If you have children, your life will likely be richer but you will find it awfully tough to retire d 3. v.y nizingly slow. But if you save 12 or 15 of your income every year ior may oe 10 ycaia, yuui cuuiucu m aainc uflctmont will start dwarf-.7 inp- vnnr annual 7 ,f 5, vu 1 ftl i .', WPj vv ifTl' 1 30-ye- ' j ! 1 WW' I the iracK 10 n- nancial inde- A""?v- - early. pendence. 4 Put pen to paper. Write down what percentage of your portfo lio you want invested in different market sectors, such as large U.S. stocks, emergy ing markets, bonds and so on. This simple exercise is high-qualit- Control what you can. If you shouldn't waste time trying to outguess your fellow investors, what should you do? Focus on the things you truly can control Minimize jjour investment tax bill, by maxing out on retirement accounts and buying funds in your taxable account limit your risk, by building yourself a globally diversified portfolio of stocks and bonds. Hold down investment costs and guarantee you capture the markets' Keep your balance. That brings me to another simple but now-- , erful strategy, rebalancing. When stocks plunge, your instinct may be to cut and run. Yet you ought to be buyingand rebalancing com enormously 5 Savvy picture. If your pension will cover most of your retirement living expenses, you probably don't need much in bonds. If seven-figur- portfolio's your growth will seem ago- - Think big. inves- management money may be about securing the right mortgage and se-- ; lecting the right funds. But! it's also about seeing the big powerful Your written asset allocation is both a roadmap for your portfolio and also a reminderwhen markets sink confidence and your slumps of the strategy you committed to in calmer times. 2 Larry.R0utw4j.com 2 (212)859-121- Senior Editor vail and long-tertors are rewarded. performance, by purchasing index funds. pels you to do just that. . The notion: Occasionally calculate your portfolio's current allocation, compare that to your written percentages and then buy and sell to bring your investments back in line with your target mix. Take comfort. Buck ing the crowd and buying during declines is a whole lot easier if you bear in mind that stocks aren't mere pieces of paper, but rather a claim on the vigor of U.S. and foreign economies. Economic growth drives 6 earnings corporate up which, in turn, propel share prices higher. True, stocks sometimes race ahead of corporate earnings and sometimes they trail behind. Eventually, however, economic fundamentals pre- - 8; Take the long view. As you might gather from all of the above, sensible money management is pretty simple. But it isn't easy. Our plans to save get derailed by impulse purchases. Our long-terstrategy is tossed aside in panicky investment decisions. Yet, a year from now, last month's market turmoil will be a distant memory and this weekend's impulse purchases will be gathering dust . My advice: Strive might-view. We ily to take the long all want a secure financial future. Saving regularly, low investment costs and broad diversification will get us there. Tempted to stray? Banish such thoughts-a- nd keep your eyes fixed firmly on the prize. Last chance: Email Jonathan at )onathan.clements(?wsJ.com , |