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And Now, a Word From the Hottest Fund This Quarter...

Other news outlets like to make stories out of the quarterly results. Here's our humorous version.

People love a horse race. And at the end of every quarter, the financial sections of newspapers write extensive stories on the best stock and bond funds for the last three months.

This, as we all know -- in our heart of hearts -- is a dumb way to look at investing. A three-month return doesn't tell you anything about a manager's stock-picking skills; hot performance is fleeting; a sector that's up a lot is very often expensive; and luck does apply to investing.

One way to deal with the flurry of senseless quarter-end fund reviews is to throw them on the barbeque.

Or, if you insist on reading the predictable recaps of the last three months, then you'll need a guide to know what the managers aren't saying in these stories. Consider some of the posturing

translation: lying you'll witness quarter after quarter.

Here's my take on your garden-variety "quarterly fund performance" story, with some helpful translations for investors.

Three Cheers for Open Drain Fund!

Yelverton Smith's Open Drain fund was up 25% in the first quarter, topping all other funds in its category.

Translation: Look back another nine months and you'll see that the fund has lost half its value in the last year. And that's not including the pain it inflicted in 2000 and 2001.

The stocks in his portfolio have rebounded from very oversold levels, says Smith.

Translation: The dumb money has finally come back to these stocks.

"Just six short months ago, the market was treating these stocks as if the companies were going out of business. Clearly, these stocks aren't worthless after all," he says.

Translation: Well, at least not yet.

The fund's top-three positions are all up more than 50% over the last three months.

Translation: Those stocks went from being worth a buck a piece to a buck fifty.

All the stocks in the fund's top 10 are sporting double-digit gains for the quarter.

Translation: But the manager added seven of those 10 stocks to the portfolio two days before the quarter ended.

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And he's still bullish on each company's prospects.

Translation: Anything to convince other folks to buy these ridiculously expensive stocks and take them off his hands.

"To be sure, we have had the wind at our back in recent months," says Smith.

Translation: And the sun will come out tomorrow.

How does he find these spectacular opportunities? Smith and his team identify secular trends that will drive growth.

Translation: "We blew through a lot of money on those online grocers. Hopefully no one remembers."

"We also invest in strong management teams. Take Engorge Technologies, for example," Smith adds.

Translation: "We did meet Engorge's management team during the IPO road shows back in the day. I vaguely remember most of the executives having strong handshakes. Except the CFO. But he's in jail, so that's not a problem."

"We're also finding new opportunities."

Translation: If it's going up, we're buying.

"But have also recently eliminated some positions from the fund."

Translation: And if it's falling, we're selling.

"It's been a difficult three years. But we're pleased with the recent performance and we're confident about the fund's prospects going forward."

Translation: "Please, oh, please won't someone buy this fund? I've got mortgage payments to make on that third house I just bought."

Smith does have a word of caution to investors who think they can replicate the fund's performance. "You cannot just invest in any company in this sector of the market. Here at Bailing Water Capital, we know how to separate the wheat from the chaff," Smith says.

Translation: "Of course, we've spent the last three years separating our investors from their money."