The Lazy Person's Guide to Investing by Paul B. Farrell

Author:Paul B. Farrell [FARRELL, PAUL B.]
Language: eng
Format: epub
Tags: BUS050020
ISBN: 9780759509894
Publisher: Grand Central Publishing
Published: 2004-01-07T16:00:00+00:00

TODAY’S TEN MOST POPULAR ARE RARELY TOMORROW’S

So let’s take a close look at how they performed back then, just a few months after the start of the bear market . . . and how they were doing a little over two years later, deep into the bear market as the ten-year average of the S&P 500 fell from 16.0 down to 9.7 percent annually:

1. Fidelity Magellan. At the end of July 2000 Magellan had $105 billion in assets and was sporting a three-year average return of positive 18 percent annually. Twenty-eight months later—around Thanksgiving, in late November 2002—Magellan’s assets had shrunk to $58 billion and its three-year average had dropped to a negative 12 percent. Its ten-year average, however, was holding at 10.1 percent annually.

2. Vanguard 500 Index. The leading fund tracking Standard & Poor’s 500 largest large-cap stocks experienced a drop similar to Magellan. At the beginning of this period, in July 2000, assets were $106 billion and returns were 16 percent. And twenty-eight months later assets had dropped to $56 billion, while the fund’s three-year average returns were a negative 12 percent. The fund’s ten-year average annual returns matched Magellan’s at 10.1 percent.

3. American Century Ultra Fund. Another well-known and popular member of the top ten largest funds watched its assets drop from $41 to $18 billion while its three-year average returns sank from a positive 20 percent to a negative 10 percent through the twenty-eight-month period.

4. American Funds. American Funds is the third largest fund family, behind Vanguard and Fidelity, and not to be confused with the American Century family of funds. As a whole, the three American Funds among the top ten—the Investment Company of America, Washington Mutual Investors, and EuroPacific Growth Fund—fared slightly better than the other seven. Their total assets dropped from about $138 billion to $108 billion and their average returns dropped from the 12 percent range to a minus 6 percent, with their ten-year average returns still about 10.7 percent.

5. Janus Fund and Janus Worldwide. The Janus family of funds was one of the top performers during the late nineties and the hardest hit by the bear market. These two funds were among the ten largest in early 2000, with assets of $47 and $42 billion. Each lost about two-thirds of its value, dropping to $16 and $13 billion. Their returns dropped dramatically: Janus was blazing along at 27 percent on a three-year basis in early 2000 and dropped to minus 20 percent in 2002. Worldwide dropped from a plus 25 percent to a minus 17 percent three-year annual average. Ten-year averages were 8 and 10 percent, respectively, at the end of the twenty-eight months.

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