In the past three months we saw a rise in February followed by successive losing months in March and April. For the three months the average of all funds decreased 2.4%, with all of that loss coming in April. So far this year the average mutual fund has lost 5% with the greatest losses in small cap funds (8%), technology funds (12%) and precious metals (13%). At this point we continue to see value funds outperforming growth funds with losses of 4% compared to growth fund losses of 8%.

Looking forward one can see several bright areas offset by a number of concerns. On the plus side employment is up, consumer spending continues to be buoyant, housing construction remains solid and gains continue to be made in productivity. The other side of the ledger points to increased energy cost, rising short-term interest rates, a burgeoning national deficit and increasing outsourcing of jobs and work.

So what’s a person to do? My personal beliefs and the preponderance of sources that I read counsel a staying of the course. It seems that a person should remain substantially invested, largely in equities. There does appear to be a style shift in investments with a moderate movement toward large-cap securities and growth, and away from value investments. For some portfolios this may mean a moderate shifting of equities into a somewhat more conservative position.

At this point the markets do not feel like a roller coaster going over the top of the curve. Rather it appears more like a catching up from the 37% market increases of 2003 and 14% market increases of 2004. As always sound investment seems to rely best on a steady hand on the helm and a steady course to turbulent waters. I believe it is no different at this time.

Please call me at any time that I can help with your financial or investment affairs.

~Roger Werner~