I must confess: I'm a contrarian at heart. I'm also a cheapskate. Now don't get me wrong -- this doesn't mean that my wife gets stiffed come Christmastime. Rather, I prefer stocks trading at low multiples to those with forecasted earnings-growth estimates that have catapulted investor expectations to infinity and beyond.
Don't be mislead: If you're the Buzz Lightyear type, you should certainly check out Netflix
If, however, you're an investor of the value persuasion, here's some good news: Companies like ExxonMobil
While that kind of valuation-to-quality profile is alluring at first glance, there's usually more to multiples than meets the eye. Sometimes, even stocks that seem like stalwarts trade at depressed levels because, well, they're depressed.
Other times, of course, they don't. Fortunately, you don't have to be a financial pro to make big bucks by taking advantage of market inefficiencies. That can be a full-time job on its own, so it's a good thing that some other smart folks out there already do it for a living -- successfully.
I'm talking about world-class money managers, the savvy types who run low-cost funds with battle-tested strategies and have delivered solid performance for investors year after year. These managers, not coincidentally, generally eat their own cooking, aligning their interests with shareholders' by investing their own savings in the funds they run.
When it comes to mutual fund data points, few are better indicators of quality than this.
And sleep well
Despite what you may have heard, you can beat the market while sleeping peacefully at night, with help from top-notch mutual funds. The secret is to focus on key criteria such as costs, historical performance during the current managers' tenure, and whether those managers put their money where their mouths are, so to speak.
These are precisely the kind of funds we seek out for members of the Fool's Champion Funds investing service. As an example, one of our picks is a large-cap value specialist whose portfolio recently included eBay. Between 2000 and 2002 -- a period during which the S&P shed some 37.6% of its value -- this fund racked up a gain of more than 50%. Talk about investing with a safety net!
And speaking of safety nets, despite market volatility, roughly 90% of our recommendations have made money for shareholders since we gave 'em the nod. As a group, they're beating the market by a healthy margin, too.
You're welcome to give the service a spin and see whether you can't put it to good use. I suspect it'll come in handy as you seek to fund (pun intended) your financial future.
This is adapted from a Shannon Zimmerman article originally published on Dec. 12, 2006. It has been updated.
Fool analyst Adam J. Wiederman really has given his wife some nice presents, but owns no shares of the companies mentioned above. Netflix is a Stock Advisor recommendation. Intel and Wal-Mart are Inside Value recommendations. You can check out the Fool's strict disclosure policy by clicking right here.
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