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Five Funds to Buy in a Market Crash

08/13/07 - 07:18 AM EDT

Brett Arends

And even if you do buy, the temptation will be pretty powerful to panic and get out again if things keep falling.

So how do you get round the nerves?

Here's one idea: In a market panic, don't chance your hand buying individual stocks. Give your money instead to a select group of market veterans and let them deal with it.

The right managers will know how to profit from the panic by sifting the real bargains from the market's booby traps. And they will give you some pretty good downside protection. Actively managed funds tend to hold up better than the index when stocks collapse.

I'm not just talking about ordinary, run-of-the-mill mutual funds run by a big investment company either. Those managers are too busy watching their backs in the corporate shuffle to act freely.

Nor am I talking about index funds.

I'm talking about those rare funds run by seasoned captains who know how to sail through a stock market hurricane.

The ones where the manager has the flexibility, the experience and the skill to buy the right things at the right time. And where that manager is prepared to sail into the wind because he's done it so many times before.

Who are these rare and special managers?

In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining TheStreet.com in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.

Life & Money

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