Funds: Follow the leader?
Savvy mutual-fund investors know they need an astute manager at the helm, said Andrew Tanzer in Kiplinger’s Personal
Finance. So what happens if your fund manager jumps ship? In recent months, for instance, Jeff Gundlach and Philip Barach of TCW Total Return Bond Fund left to start their own firm, while Anne Gudefin and Charles Lahr of Franklin Mutual Global Discovery Fund decamped for Pimco. If your fund company has successfully navigated past transitions, it may not matter. If, however, the fund has been a “one-man show,” the loss of its leader is reason to worry. In that case, “one strategy you might consider is to stick with the jockey, not the horse.”
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Trolling for value stocks
A rebound in stocks means that “the pickings are a lot slimmer for buy-low devotees,” said Carla Fried in Money. Yet value stocks are out there, if you know where to look. “Start in the most obvious place: among those investments that didn’t fully participate in last year’s rally.” Health care, dragged down by fear of reform, is one laggard. Drug stocks such as Johnson & Johnson and Eli Lilly typically fetch a premium; right now they’re trading at a 40 percent discount. On the flip side, some stocks still are not priced to their full potential. Tech stocks have appreciated recently, but the sector’s price-to-earnings ratio has actually fallen since the credit crunch, thanks to increased earnings. Both IBM and Hewlett-Packard, for instance, “managed to boost or maintain profit margins during the downturn by aggressively slashing costs.”
The hidden costs of DIY
Homeowners are increasingly willing to “get their hands dirty” and fix problems themselves in order to save on improvement costs, said Amy Hoak in Marketwatch.com. But the do-it-yourself route could end up costing you an arm and a leg (or at least a couple fingers). A shoddy skylight installation, for instance, could lead to leaks, water damage, and, worse, mold—all requiring more expensive repairs. And you might hurt yourself—or someone else. So be careful with any repairs involving water, gas, electricity, or climbing to great heights. If you insist on playing handyman, “leave the heavy lifting” to others—and do only the “finishing touches” yourself.
