I don't need to tell you that this is a difficult market in which to make money. And I certainly don't need to remind you how painful it is to lose money.
But even with the S&P 500 down 12% in the first half of the year, and the average mutual fund down 9.7% during the same period, there are investments making many investors rich.
This news probably comes as a huge surprise to shareholders of American International Group
Or maybe, like me, you're suffering from seeing the red of American Eagle Outfitters
"The market will rebound" is supposed to be a comfort -- but you and I both know there's no consolation for losing money.
Less money equals less fun
But there are some investors undoubtedly confused by all this bear market talk. Year-to-date, their money has beaten the market by nearly 20 percentage points, and over the last 12 months, they're up a whopping 48%!
Who are these lucky folks?
Investors who got in on CGM Focus (CGMFX), a mutual fund we recommended to subscribers of our Champion Funds newsletter back in May 2006. The fund met all of the key criteria we look for in mutual funds:
- Low expenses
- Long managerial tenure
- Long-term market-beating performance
In addition to passing this fundamental litmus test, we recognized the ability of manager Ken Heebner to couple an aggressive offense with a sturdy defense -- even with a concentrated portfolio of roughly 25 stocks, which currently includes PotashCorp
Bullish on bears
But how did we know he was ready to profit if the market turned south?
We closely examined his previous bear-market experience -- and were impressed by his 2001 performance, when he beat the S&P 500 by 60 percentage points. This simple analysis is often overlooked by investors, who are instead lured by one- to three-year outperformance.
After all, having confidence that your money will grow during both bull and bear markets is essential for long-term investors.
Taking the lessons to the bank
To judge a fund's management, it's important to look at their performance in good times and bad. A manager who posts big gains during bull markets, only to lose it all when the market takes a dive, won't help your portfolio in the long run.
Outstanding performance in bear markets and bull is one of the things we look for at Motley Fool Champion Funds -- and we've found a number of market-beating mutual funds. Our recommended funds, as a group, are currently beating the S&P 500 by more than 20 percentage points.
To see what other funds meet our criteria -- and outperformed the last bear market -- take a 30-day free trial. Click here to get started -- there's no obligation to subscribe.
Adam J. Wiederman owns shares of American Eagle Outfitters, which is a Stock Advisor recommendation. The Motley Fool also owns shares of American Eagle Outfitters. UnitedHealth Group is a Stock Advisor and Inside Value recommendation. CGM Focus is a Champion Funds recommendation. The Fool's strict disclosure policy is here.