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Best of 2007

December 31, 2007

Mark on the markets

Best of 2007

With the end of 2007 and 2008 ahead, any of us who manage money for others or those who manage their own need to review what was successful and what was not. We need to anticipate where changes need to be made and where to place new money in a global marketplace which I believe will be a difficult environment to make a good return without a fair amount of risk. A money manager’s function is, or should be as much about risk management as it is about picking good stocks or funds. You cannot rely upon stocks or funds that have worked in the past, you must be forward thinking and stay ahead of the curve.
While U.S equity markets were up single digits, some emerging markets were up 70+%.
Sectors such as clean energy were up 40%, Gold 23%, Oil 38%. Some companies like Apple are up about 150%, and others like Countrywide financial are down from highs this year of $45 to its current $8.50.
A mistake made by many is to “chase” stocks or funds that had been good in the past and buy them thinking that that will continue. A strategy used by some investors is to buy the five stocks least favored by analyst. If you had done that last year you would have been up about 47%, and if you would have listened to the analyst, and bought the 5 Dow stocks most recommended you would have made about 1% in 2007.
Now is a great time to review your portfolio for its performance, risk, diversification, and fee’s. Don’t think that because you do not see the fee’s in your mutual fund statements that they are not there because they are. If you have a variable annuity, the fees are there. If you use a broker or advisor, make sure you understand how they are compensated. You should not hesitate asking how your broker or advisor is compensated, because if they are doing a good job for you, they will not mind disclosing all aspects of how they make money managing your assets.
2008 should be a year that offers great opportunities as well as risk. Be patient and make informed choices. If you don’t have time to do the work required, find someone that does, and make sure that persons objective is to protect and grow your assets, investing in areas that that fit your lifestyle from an ethical, moral or faith basis if that has importance in your life. In other words, someone who works for you.
Let us learn from our mistakes in the past but not dwell on them. Let us move on to 2008 with curiosity and wisdom.

Mark Patterson is a registered investment advisor with MHP Asset Management LLC, and can be reached at 447-1978 or Mark@mhp-asset.com