How to Invest When You Hate Losing Money

As an investing geek, I enjoy tracking the market's ever-changing moods. I get a kick out of watching Wall Street swoon or soar based on the latest scrap of macroeconomic data. Even better is watching the Gucci-loafer set's reaction when a company misses or exceeds earnings estimates by some marginal amount. Was the result already priced in? Was it a genuine surprise?

Inquiring minds wanna know!
It depends on who you ask. Last week, for instance, DR Horton (NYSE: DHI  ) and Coach (NYSE: COH  ) beat the Street's forecasts but saw their stock prices pull back after decent-sized pops. Meanwhile Johnson & Johnson (NYSE: JNJ  ) , it seems, can do no right: The health-care kingpin also surpassed analyst expectations -- and by a whole $0.02 at that -- but for the week, the stock just continued its downward drift.

Meanwhile,Caterpillar (NYSE: CAT  ) missed estimates and its stock price shot up anyway. Go figure.

Geek out
Still, while as an investing geek I'm intrigued by Mr. Market's mercurial ways, as an actual investor, I want nothing to do with them. Well, next to nothing anyway. I do own a handful of individual stocks, but the lion's share of my nest egg is invested in Grade-A mutual funds for a simple reason: I hate losing money.

Funds aren't immune to downturns, of course, but they're a lot less risky than individual stocks, which have a bad habit of behaving irrationally. Funds, meanwhile, are more even-keeled and logical. Indeed, if you do your homework and focus on common-sense criteria like fees, strategy, and whether a fund manager invests his own moola alongside that of his shareholders, you can go a long way toward identifying those funds that can both grow and protect your nest egg.

Call it a two-for-one
That's the premise we've been operating under at the Fool's Champion Funds investing service for nearly three years now, and so far all but two of our picks has made money for members. That pair, by the way, is off by less than a percent, and one of them is among my favorite funds for new money. That pick recently included the likes of Berkshire Hathaway (NYSE: BRK-B  ) , EchoStar Communications (Nasdaq: DISH  ) , and Duke Energy (NYSE: DUK  ) in its compact portfolio, and has had exactly one losing year since opening for business in 1999. That occurred in 2002, when it shed less than 2% during a year that saw the S&P 500 fall by more than 22%.

If you'd like to sneak a peek at that fine fund and all of our other recommendations -- a group that's bested the market by roughly 12 percentage points -- click here and snag a free 30-day guest pass to Champion Funds. Your pass provides access to our model portfolios, back issues, and members-only discussion boards -- resources that should come in handy for folks who love to invest but hate losing money. Check it and see.

Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service, and at the time of publication didn't own any of the securities mentioned above. Duke Energy and Johnson & Johnson are Income Investor picks. Berkshire Hathaway is an Inside Value recommendation. You can check out the Fool's strict disclosure policy by clicking right here.


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