After cresting the fabled 12,000 mark, the Dow -- along with the broader market -- has been moving in fits and starts. The numbers snapped back yesterday, for example, but small caps like CNET
The market's bigger boys, meanwhile, have hardly been immune to the volatility: Archer Daniels Midland
No, seriously. It's when high-quality stocks stumble upon temporarily hard times that savvy types spring into action and snap up shares when they're trading on the cheap. Just ask Don Yacktman, money manager extraordinaire.
Yacktman stuck to his strategic guns during the go-go late '90s, and because he's a value-oriented "fundamentals" investor, he paid a price for it, too: His Yacktman Focused (YAFFX) fund -- which recently counted the likes of Coca-Cola
But that was merely a prelude to the fund's success. Indeed, between January 2000 and December 2003 -- quite a topsy-turvy time for Mr. Market, as you may recall -- Yacktman Focused cranked out a total return of roughly 89.2%. Meanwhile, the S&P 500 posted a loss over that same period of 19.7%.
The moral of the story: When it comes to navigating market turbulence, owning world-class mutual funds like Yacktman Focused is a smart move. The built-in diversification they provide can help cushion the blow when times get tough. And as Yacktman has shown, you can also make serious money during protracted downturns -- and with a fund that participates in market updrafts, too.
Wheat, meet chaff
The trouble is that funds like Yacktman's are exceptions to the rule: The vast majority of the industry's "products" are underperforming duds. With that in mind, the question quickly becomes: How do you cherry-pick the keepers, the funds that are worth building your portfolio around and that can keep you in the game even during sell-offs?
It's a fair question, and in doing my homework for the Fool's Champion Funds investing service, I've found that you can begin to answer it by ferreting out funds with reasonable expense ratios. Since a fund's price tag comes right out of returns that would otherwise flow to you, that feature provides an important competitive advantage for a fund's manager.
And speaking of management, the tenure of a fund's stock-picker-in-chief is another key data point. Lots of folks get stars in their eyes when looking at a fund's eye-popping performance history. Fact is, if that track record doesn't belong to the manager who's currently calling the shots, it doesn't tell you a thing about a fund's forward-looking prospects.
The Foolish bottom line
There are plenty of other moving parts when it comes to smart fund investing, of course, and we strive to consider them all in Champion Funds. And so far, so good: Since our debut in March 2004, the newsletter's list of recommendations has bested the market's average by more than eight percentage points.
If you'd like to check out our model portfolios and list of recommendations -- which includes another fund that Don Yacktman has managed since 1992 -- just click here for a completely free guest pass. Your pass provides 30 days of access to a service that's designed to help you beat the market with funds -- and without all that pesky volatility to boot.
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.Yacktman Focused was a recommendation in The Motley Fool's Blue Chip Report.Pfizer and Coca-Cola are Inside Value picks. CNET is a Rule Breakers choice. FormFactor is a Hidden Gems selection. Kraft is an Income Investor pick. You can check out the Fool's strict disclosure policy by clicking righthere.