Insightful Investing

Talk about a change of fortunes, while Cohen & Steers Realty Shares (CSRSX) gain of 9% put it on the top of our charts for again this quarter, it co-leader, Royce Value Plus (RYVPX) actually lost almost 1% for the quarter. In fact, all of our real Estate funds picked up at least 8% this summer.

Large Cap Value Funds TCW Dividend Focused (TGIGX) and Vanguard Windsor II (VWNFX) both gained over 6% to lead our stock funds. Marsico International Opportunity (MIOFX) was our leading International fund with a 4.4% return.

Our bond funds bounced back this quarter, led by our two Westcore funds. Westcore Plus Bond (WTIBX) and Westcore Flexible Income (WTLTX) both earned more than 3% for the quarter to top the fixed income categories.

Our Mutual Fund Portfolios and Best Fidelity Funds have been updated through December 2005. The investment performance history of our mutual fund portfolios are tracked on our investment portfolio performance page.

Asset Allocation for 3rd Quarter 2006

Fidelity Value Discovery (FVDFX) was added to our Mid Cap Core funds, and Northern Small Cap Value (NOSGX) gives you an alternative in the Small Cap Value category. We did not remove any funds from our recommended list this quarter.

Now that the Fed has decided to stop raising interest rates, we are moving 2% of our allocation from Short Term Bonds to Intermediate Bonds to increase the income in our portfolio.

Asset Allocation October 2006

The market bounced back with style in the third quarter. as Large Cap Value investors gained 6.2% while Small Cap Growth stocks fell for the second straight quarter, dropping 1.8%. While the experts have been telling us all year that its time for Large Cap Growth to start dominating the investment cycle, they only got it half right. As it turned out, you would have been more in style had you followed the experts than staying with your Small Cap Value stocks that have been leading the for the better part of this century. Even though it is probably only a matter of time until the Growth Stocks take charge again, the best defense against poor market timing is a well diversified portfolio.

What was most surprising about this quarter was the bounce back in Real Estate. While home builders took a beating, REIT’s were up over 9% to keep that on top of returns over the past 1, 3, and 5 years. International stocks continued to perform well, bringing home a respectable 4% this quarter.

Now that the Fed has decided to at least take a vacation from raising interest rates, Bonds picked up almost 4% to gain back everything that they lost earlier in the year.

Investment Returns September 2006