BBS: ExecNet Information Systems - New York 914 667-4567 Date: 12-30-93 (17:33) Number: 37794 To: ALL Refer#: NONE From: JTR@MOSCOM.COM Read: NO Subj: Mutual Fund Model Portfol Status: PUBLIC MSG Conf: Misc.Invest (1291) Direction: FORWARD Ron Olsen writes : I'm interested in seeing how others make investment decisions. : These are always the issues: : which funds do I choose and how much do I put into each one? : Lump sum or dollar-cost-average? When do I get in? : When do I get out? A very good question, especially if there are many people who, like me, use the end of December to realign their mutual fund investments. I view 1994's best investment areas to be small company global, Europe, and Latin America. While all had wonderful years in 1993, I see no change in their fundamentals. Taking $10,000 and investing in 4 funds (at $2,500 per) my choices would be 1) Scudder Latin America (Latin America) 2) T. Rowe Price International Discovery (international small co) 3) Invesco Europe (large and midsize companies in Europe) 4) Scudder Global Small Company (small co's in US and elsewhere) These funds (except for Europe) are extremely aggressive. I view their 1994 upside to be >50% and their 1994 down side to be about 30%. Note that I would not be this agressive with virgin money and have owned 3 of the above funds for much of 1993. All of the above funds show good to great momemteum going into 1994. Latin America is still moving up with NAFTA. Price Discovery is finally showing that international small company investing is a viable option (after a difficult first couple of years). Europe is finally beginning to move in earnest. Almost any of the funds specializing in Europe should do well in 1994. Scudder global small company has a stake in US small companies which may be one of the few bright areas of the US market in 1994. However, I would not feel comfortable leaving these investments unmonitored for any extended period of time. For a less risky portfolio one might try 1) Invesco Europe 2) T. Rowe Price International Stock 3) T. Rowe Price or Scudder International Bond 4) $2,500 in a money market to invest in a US small company stock fund if the market drops by 10-20%. or for more upside potential (ie risk) Montgomery Emerging Markets I view the up side to the DOW as under 10% (<4000), the down side as greater than 20% (<3000). A really scary portfolio would be based almost totally on the US markets. Even worse would be significant exposure long term US bonds. I'll be red faced (and poorer) if the DOW is at 4100 and 30 year treasuries yield under 6% this time next year. My four favorites at the start of 1993 were Janus 20, T. Rowe Price New Asia, T Rowe Price International Stock, and Twentieth Century Ultra. In my mind New Asia has become a hold due to worsening Hong Kong - China relations, not to mention frothy markets. While New Asia has only 25 - 30% of its portfolio in Hong Kong, if China becomes beligerent the whole region will suffer. It would become a buy if there is a significant pullback ... > 15%. International stock was a good performer in 1993 and will continue to be so. Ultra has had a good year, but the US market may be topping. Janus 20 is a LCCapApp fund and has not done well this year. Areas to watch in 1994 could be: gold (so what else is new), biotech, international telcommunications, and Japan. If the Nikkei hits 14000 and the yen hits 115 I'm buying. Biotech is a great industry in its infancy which got hammered for much of 1993. 1994 may be different. I'm mulling over one of the new global telecommunications funds and considering buying into a gold fund just on general principal. If you accept the premise that stock markets go up 60% of the time and go down 30% of the time it does not make much sense to dollar cost average. I figure dollar cost averaging is a major attraction of 401K plans anyway. For investments I control it is better to just rotate from area to area. I'm not above rotating into money market funds either, especially when I can't sleep at nights. I invest for the long term (children's college, retirement). Please note that none of the funds mentioned above would be really suitable for a short term investment. A caveat: if the US market corrects by much over 15-20% I'm dumping many of the above investments and buying US. A large US correction will take a major portion of the world markets down. US markets are safer for US citizens, especially when the dollar is appreciating. John Roberts PLEASE NOTE : I am not an investment advisor. What you do with your own money is your concern, not mine. However, I am interested in hearing about your investment ideas.