Stocks and Funds and Making Money

By Dian Vujovich

Whatever you think about the state of our U.S. economy, the scandals on Wall Street, the over-the-top incomes of hedge fund managers, bankers or insurance execs, the under-pay of many worker-bees, long-term investing, short-term trading, speculators, etc., there’s no denying the fact that the stock market has been making a lot of investors richer rather than poorer this year.

The April Fool’s Day closing prices of the 30 stocks that make up the Dow Jones Industrial Average show that there continue to be four stocks selling under $20 a share. It’s the usual suspects and includes Alcoa (AA), Bank of America (BAC), General Electric (GE) and Pfizer (PFE).

Of the four only one, Pfizer, closed lower than it began the year. On January 4, Pfizer’s opening price on the first trading day in 2010, was $18.27. On April 1, it closed down about a-buck-and-a-quarter, or roughly 7 percent, at $16.99, according to Yahoo finance.

The three other stocks have made delightful strides upwards. Over that same time period Alcoa has moved up over 12 percent, Bank of America Corporation up about 18 percent and General Electric, ahead by more than 25 percent. Those kinds of gains are yippee-skippy ones no matter who is doing your books. And to some might signal a review of what your targeted sell price is on each.

It’s been said that this market is making traders out of investors and that that’s not a good thing—investing is supposed to be a long-term ordeal many preach. Big market plunges downwards have a tendency to lead us to question that investment strategy. As well as make us wonder about everything from our personal risk tolerance to what the purpose of our investing was/is in the first place.

Because each of us is different, there’s no piece of investing advice that’s applicable to all. But there is this little tidbit that’s worth remembering: No one goes broke selling a stock at a profit.

Regarding equity funds, of the 12,718 that Lipper tracks, from December 31, 2009 through April 2, 2010, the average stock fund was up 5.75 percent. Big category winners were Small-Cap Value funds, ahead on average 10.42 percent and Financial Services funds, up 12.01 percent. The only category to lose ground was Dedicated Short Bias funds, down 10.01 percent.

Obviously betting that this market was headed south during the first-quarter of 2010 didn’t pay off.

As for what’s ahead, as always, time will tell.