As long-term investors, we know that when Mr. Market throws one of his periodic temper tantrums, it can be an excellent time to buy high-quality companies while they're trading on the cheap. Indeed, when heavyweights like BP (NYSE:BP), Archer Daniels Midland (NYSE:ADM), and Caterpillar (NYSE:CAT) weigh in with stock prices some 20% below their respective 52-week highs -- and with price-to-earnings ratios lower than their respective industry averages -- buy-low/sell-high greatness would seem to be within spitting distance.
What's more, when companies like Anadarko Petroleum (NYSE:APC), DR Horton (NYSE:DHI), Chico's FAS (NYSE:CHS), and SanDisk (NASDAQ:SNDK) -- long-haul market beaters all -- trade more than 30% below their highs, you can practically smell the fire sale.
Thing is, there's no accounting for taste -- particularly where the fickle types who move markets are concerned. If you're interested in insulating your portfolio, therefore, top-shelf mutual funds are a great choice. For my money, if you want to both grow and protect your nest egg, no other investment vehicle is nearly as compelling.
How's that?
Why hitch your wagon to just a clutch of individual stock picks, when a no-muss, no-fuss portfolio of 'em can help get the market-beating job done without those pesky (and dramatic) performance swings? Indeed, mutual funds make it a breeze to design a carefully calibrated portfolio, one that provides smart exposure to small caps and large, international and domestic stocks, and racy growth plays as well as discounted value stocks.
That kind of diversification is Foolishly wise, too: When one area of the market hits the skids, often another revs up, at least on a relative basis. The upshot is that, with funds, you can have the best of all worlds -- and limit the damage when stocks take a tumble.
Make no mistake
None of that is to say that funds are volatility-free, of course. Still, at Motley Fool Champion Funds -- the Fool investment service that I've headed up since March 2004 -- we're batting over .900 when it comes to making recommendations that make money for shareholders. Given our emphasis on low fees and high-caliber management teams who invest their own money alongside their shareholders, that's not a surprise: These guys hate losing money.
Indeed, while we hadn't yet opened for business, one of our newsletter picks actually managed a gain of 51% between January 2000 and December 2002 -- a time frame during which the bears largely roamed free. (For the sake of comparison, the S&P shed nearly 38% of its value over that same period.)
The Foolish bottom line
If you'd like to sneak a peek at that pick and all our others, look no further: Click here and the complete Champion Funds lineup -- along with our members-only boards and model portfolios -- is yours for the taking. There's no obligation to subscribe, so give it a whirl and learn how a portfolio of world-class mutual funds can keep you in the game during bear markets -- and when the bulls run free, too.
Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service and co-advises Motley Fool Green Light with his pal Dayana Yochim. At the time of publication, he didn't own any of the securities mentioned above. You can check out the Fool's strict disclosure policy by clicking right here.
