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Mutual fund performances and cheap Dow stocks

By Dian Vujovich

If the first week is any indication of what direction stocks are headed during the year, making money in equities could be tougher than it has been over the past few years.

Looking at the performance of stock mutual funds, the average Equity Fund is down about one-quarter of one percent year-to-date through January 8, 2015, according to Lipper.

There are 14,442 funds included in that category and each fund falls under one of these three headings: U.S. Diversified Equity Funds, Sector Equity Funds, and World Equity Funds. Each of those three headings includes a number of sub-headings. Year-to-date, the Sector Equity Funds group is the only one posting a positive return. Funds here are up on average 0.51 percent.

If you’re wondering where the action is in the Sector arena, Precious Metals Equity Funds have gained the most, up 6.11 percent on average. Following it are Real Estate Funds, up on average 4.33 per cent. Both Health/Biotech Funds and Global Health/Biotech Funds are up on average over 3 percent.

The biggest Sector loser so far is Commodities Energy Funds. They’re down 5.59 percent. (For a complete listing of Lipper fund performances, visit Allaboutfunds.com. Data updated weekly.)

Moving out of funds and into individual stocks, in early March 2009, there were five stocks in the DJIA with per share prices selling for less than $20. In alphabetical order they were Alcoa (AA), $6.11 per share; Bank of America (BAC), $3.57; Citigroup (C), $1.17; General Electric (GE), $6.29; and General Motors (GM) at $2.13 per share. (Prices here were mid-day figures on 3/9/14)

Today that are no, as in zero, nada, not-a-one company with shares selling for under 20 bucks a share in the current line up of stocks in DJIA.

Instead, today’s Dow cheapies have per share prices in the 20- and 30+-dollar range. Of the 30 stocks that make up the DJIA, there are 5 companies with per share prices that low.

The two least expensive include General Electric (GE); it closed at $24.03 on Friday, Jan. 9 2015—that’s about four times more than it was selling for in my March 2009 list. And Cisco Systems (CSCO). It closed at $27.79 last week.

The other three include Pfizer (PFE) at $32.65 per share AT&T (T) at $33.40 per share, and Intel (INTC) at $36.76

If one wanted to purchase one share of each of these not-so-cheap Dow cheapies and did so based on 1/9/15 closing prices it would cost $154.63, not including commissions. Or, about eight times more than what purchasing five of the least expensive stocks in the DJIA would have cost in March 2009.

Back to my under $20 list of six years ago, here’s how the per share prices on each has changed:
Alcoa (AA) went from $6.11 to close Friday at $16.11 per share; Bank of America (BAC) from $3.57 to $16.98; Citigroup (C) from $1.17 to $50.78; General Electric (GE) from $6.29 to $24.03; and General Motors (GM) from at $2.13 per share to $35.59 per share.

Stocks have had the wind at their back— thanks to a variety of economic reasons— over the past few years. But who knows whether that wind will keep blowing in 2015.

My best advice? Invest thoughtfully.

To read more articles, please visit the column archive.

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