The resulting list was heavy on the rising stars of the telecommunications, semiconductor and Internet sectors. And those picks would have worked out just fine if the trends of that moment had dominated the next five years.

But those trends broke in 2000, revealing that some of these stocks were the real thing and others were the products of wishful thinking. The portfolio's crystal ball had a very big crack in it that proved very expensive. From its inception in July 1999 through July 2002, it lost 52%. That was about even with the performance of the Nasdaq Composite, down 51% for the period, and worse than the performance of the S&P 500, which was down 32%.

The Future 50 bounced back from July 2002 through July 2003, gaining 22%. But while that was better than the 7% gain on the S&P 500, the bounce still wasn't as big as the Nasdaq's 27% gain. The crystal ball was still broken as far as I was concerned: I expect an aggressive portfolio like the Future 50 to be volatile, but I don't think it should fall more than the index in a bear market and then trail in a bull market.

From July 2003 through July 2004, the portfolio did better on that score. The Future 50 gained 12.9% during that period, beating both the 10.2% gain for the Nasdaq and the 11.1% gain for the S&P 500. That 2.9-percentage-point difference between the Future 50 and the Nasdaq amounts to a 26% better performance for the Future 50.

Still, you don't dig out of a deep hole overnight. This year's gain still leaves the Future 50 down a cumulative 34% since its inception. During that same period, the Nasdaq was down 27% and the S&P 500 down 16%.

Looking to Energy and Security

I think it's possible to fill in more of that hole and to improve on that 2003-04 performance in the next 12 months.

How? By concentrating on two trends, energy and security, that have the legs to carry them from the present more than five years into the future. Fast-growing demand for energy from the economies of China and India, plus the difficulty that oil producers are having in increasing capacity, will keep energy prices on an uptrend for at least the next five years. There will be slumps and peaks, but the trend is a good bet for the Future 50 portfolio.

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