This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Market-Timing Isn't Taboo for All Funds

Value Line Asset Allocation (VLAAX) is another fund that made money in the downturn of 2000. The fund's stock allocation has gone as low as 40% and as high as 100%. Portfolio manager Steve Grant uses a model that takes into consideration the valuation of stocks and the direction of share prices. His ideal stocks would be cheap and heading higher.

During the past five years, Value Line has returned 10.04% annually and outdone 96% of its competitors in the moderate allocation category.

Currently, Value Line has 75% of its assets in stocks. "We are positive on stocks, but not as super bullish as we were a few years ago," says portfolio manager Steve Grant.

Some funds regularly sell stocks and shift to cash. The managers say that they are not making market forecasts. Rather the funds hold cash because there are not enough bargain stocks available. Such funds may not be true market timers, but several managers in the group have long achieved top records by holding big cash stakes in downturns.

The cash position in FPA Crescent (FPACX) has varied from 20% to 55% of the fund's assets. A big cash stake helped the fund return 3.59% in 2000. During the first six months of 2008, FPA returned 2.97%, a smart showing in a period when the S&P 500 lost 11.96%. The fund returned 9.58% annually during the past decade and outdid 97% of competitors in the moderate allocation category.

Portfolio manager Steven Romick follows an unorthodox style, buying whatever assets seem most undervalued. Besides cash, he often holds a mix of stocks, convertibles, and high-yield bonds. Romick's aim is outdo the stock market while taking less risk. Most often he succeeds. Gloomy about the market outlook, Romick has been holding 35% of assets in cash.

Big cash positions have helped Mutual Qualified (TEQIX) avoid losses in downturns and return 8.23% annually for the past 10 years. The fund typically holds between 5% and 20% of assets in cash. Lately the figure has been around the high end of the range because the fund managers have been hard-pressed to find compelling bargains.

"Share prices have declined, but earnings prospects have also come down," says portfolio manager Shawn Tumulty.

A deep-value investor, Mutual Qualified seeks stocks that sell for only 60% of their fair value. Besides stocks and cash, Mutual Qualified also holds distressed debt, bonds of shaky companies.

During the bull market of recent years, the fund had trouble finding tempting distressed bonds. But with the markets now facing difficult prospects, the Mutual Qualified managers are confident that there will be plenty of opportunities for investors seeking attractive fixed-income investments.

Stan Luxenberg is a freelance writer who specializes in mutual funds and investing. He was formerly executive editor of Individual Investor magazine.
3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs