ALBERT HERTER

MY PORTFOLIO HOLDINGS, INCLUDING FIVE NEW FIDELITY FUNDS BOUGHT LAST WEEK.

In Uncategorized on September 24, 2009 at 15:38

The most difficult question posed to me at the public talks I’ve given the past five years is this: HOW DO YOU DECIDE WHEN TO BUY OR SELL YOUR HOLDINGS?

My tendency is to say: ‘I just get an internal feeling that the time to move is now  and I usually pull the trigger without much hesitation, although that is not always true. Much depends on so many factors at play: market trends, gains on paper, greed vs. fear , where ‘the herd’ is moving, upcoming events like elections, where interest rates are trending, what ‘the smart money’ crowd is doing, and various other intangibles.

Last week I was sitting on a ton of cash (dry powder) waiting for the right time to invest, if at all. DOING NOTHING IS ALWAYS AN OPTION. TAKING A PASS. WAITING FOR MORE TO BE REVEALED.

All this cash was parked in an institutional money market fund paying .34%! Enough already, time to look through the Fidelity Mutual Fund Guide, published monthly and containing all the information about Fidelity Funds that I would need to make my choices. I’ve used Fidelity for 25 years with great satisfaction. Were I to start today I’d probably choose Vanguard because of the lower fees they charge.

I choose the funds based on MY POSITION/TAKE/OUTLOOK at that moment. What economies are likely to produce the most gains in the future, looking for the right mix of equities and fixed income instruments. I chose to put 50% of the cash to work, and selected five funds for equal bets. Here they are:

Dynamic Strategies: FDYSX (fund # 1960). Started Oct. 31, 2007. ‘Allocates the fund’s assets among stocks, bonds and short-term and money market instruments by investing in Fidelity funds and unaffiliated exchange traded fund (ETFs).’

Global Balanced: FGBLX (fund #334). ‘Invests in equity and debt securities, including lower-quality debt securities, issued anywhere in the world.’

Canada: FICDX (fund # 309).  ‘Normally invests at least 80% of assets in securities of Canadian issuers and other investments that are tied economically to Canada.’

Southeast Asia : FSEAX  (fund # 351). ‘Invests at least 80% of assets in securities of Southeast Asian and other investments that are tied economically to Southeast Asia.’

Strategic Income: FSICX (fund # 368). ‘Uses a neutral mix of approximately 40% high yield securities, 30% U.S. Government and investment-grade, 15% emerging markets securities, and 15% foreign developed market securities.’

There you are. Diversification to the max: equities, securities, capital appreciation, income, different parts of the world economy. And I still have half my ‘dry powder’ for future purchases. Although I moved these funds from the Institutional Money Market into my largest holding, Fidelity High Income (SPHIX) paying 8.15% on a 30 -day yield basis. NAV $8.14  as of yesterday. I FIRST STARTED BUYING THIS FUND FEB. 10-14TH WHEN IT WAS ABOUT $6.  Check ‘Archives Feb. 2009’ and you can read all about it. Back in February it was paying 11.5%!   PRICELESS!!!!!

My other large holding is Capital & Income (FAGIX) also paying 8.15% on a 30-day yield basis. Today I’m parking ‘cash’ in the New York Muni-Bond fund (FTFMX) paying 3.43% and tax-free for residents of New York City and New York State.

There we are. It’s not important what I say as much as where I am putting my money today. Next time a broker calls you to suggest you buy XYZ, ask them this question: ‘ HAVE YOU PUT YOUR OWN MONEY INTO THIS INVESTMENT YOU’RE SUGGESTING I BUY? ‘   And if the answer is “NO”, ask them why not?

The book I suggest for  people to educate themselves about investing is Andrem Tobias’s “The Only Investment Guide You’ll Ever Need.”  First published in 1979 and many updates and revised editions since then. What hasn’t changed is his dedication:

‘TO MY BROKER—-EVEN IF HE HAS, FROM TIME TO TIME,  MADE ME JUST THAT.’

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