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. It's even better to watch 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 month, for instance, Royal Caribbean Cruises (NYSE: RCL ) beat the Street's forecasts by a whole $0.02 per share, but saw its stock hit the skids after making the announcement. Gannett (NYSE: GCI ) went the other way. The publishing kingpin also beat forecasts by $0.02 -- in percentage terms, a much smaller "upside surprise" -- and was promptly rewarded with a nice price pop. 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 more than three years now. So far, all but four of our recommendations have made money for members, and one of my favorite funds 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%.
With more than 90% of its assets stuffed into just 10 names, the fund appears quite concentrated. One secret of its success, though, is that nearly 17% of the fund's moola is plunked down on Warren Buffett's Berkshire Hathaway (BRK-B). That single holding provides additional exposure to an equity portfolio that includes the likes of Coca-Cola (NYSE: KO ) , Home Depot (NYSE: HD ) , and American Express (NYSE: AXP ) . ConocoPhillips and Wells Fargo (NYSE: WFC ) have made Buffett's -- and therefore this fund's -- grade, too.
If you'd like to sneak a peek at this pick and all of our other recommendations -- a group that's bested the market by roughly 13 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.
This article was originally published on Jan. 30, 2007. It has been updated.
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. Berkshire Hathaway, Coca-Cola, and Home Depot are Inside Value recommendations. You can check out the Fool's strict disclosure policy by clicking right here.
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