Charting Your Course

How to translate last year's market lessons into this year's profits

or even overpriced,” he says. “For our funds we’re buying stocks whose earnings are growing at 13% per year yet they’re selling at only 13 times earnings.” Among DeBard’s favorite industries are electric utilities and financial services.

Some experts are also upbeat about investing in foreign companies, considering last year’s strong showing. “International investing has more upside and less downside than the U.S. stock market now,” says Jonathan Pond, a financial planner in Watertown, Massachusetts, and author of Your Money Matters: 21 Tips to Achieve Financial Security in the 21st Century (Putnam Publishing Group, $22.95). “Investors should have 10% to 15% of their equity portfolios in international stocks-more in some cases-because there are excellent opportunities overseas.”

Mutual fund investing outside the U.S. falls into two categories: international funds, which hold only foreign stocks, and global funds, which may hold U.S. stocks as well. “I usually prefer international funds because they offer a pure play on foreign stocks,” says Pond. “However, one of my favorite international funds, Janus Overseas, is closed to new investors; Janus Worldwide, a global fund with the same manager, is open, so I suggest the latter fund to clients.” Among international funds, Pond recommends Fidelity Diversified International, T. Rowe Price International and Scudder International.

What about bonds? For 2000, DeBard favors bond funds, including long-term Treasuries and corporate bonds. “As the federal budget surplus increases,” he says, “the federal government will be borrowing less money and thus issuing fewer bonds. When the supply of Treasury bonds decreases, demand for those fewer bonds is likely to increase, driving up prices.” The variable here, of course, is the direction of interest rates. Should the Fed ratchet them up further in 2000, long-term T-bond yields could be made unattractive to investors, and their prices could plunge.

So what investing strategy will best position you for what 2000 may bring? The safe answer is diversification, which will help you cover all the bases so you’ll participate in the next market rally. For example, if we see a repeat of 1992, 1996 or 1997, three years in which small value funds led the way (with returns of 19.5%, 24.9% and 29.7%, respectively), you’ll be happy to have some coverage there; an exposure to foreign stocks will help if this year resembles 1993, when international stock funds (up 42.6%) drubbed domestic stock funds (which returned 13.6%).

Whatever the investment climate brings this year, if you have a balanced portfolio you’ll benefit from whichever sector leads the market. Read on for ways to chart your mutual fund course, no matter how old you are, how much you have to invest or how choppy the market waters get.

Dr. Iris Mabry, who just started a three-year pediatric fellowship at Johns Hopkins Hospital in Baltimore, doesn’t have a bundle to put in the market. She’s just launching her career and is concerned about repaying her education debt, yet she would also like to start investing.

“I’m always interested in pieces that discuss financial makeovers for physicians, so I had

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