| Question of the week:I've always invested in growth mutual funds because they seemed to do so well. But the last year or so, the value funds are performing much better than growth funds. I'm thinking of switching all my money to value. What do you think about that? --Wobbling Dear Wobbling, It seems that the upswing in value funds has caught the attention of other investors, too, and that quite a few of them have the same idea you do. According to the Financial Research Corporation, a consulting firm that tracks these things, value-style funds brought in far more in new investments in the first quarter of this year than did growth funds. When we asked the Armchair Millionaire community how they are reacting to the upswing in value and drop in growth, we got a range of responses: Ignore the swings. "Have a diverse portfolio and stick with it. Ride out the highs and lows of the market and over time you will make money." --Joe G. Move a little with the swings. "I have shifted somewhat more into value funds. I do think it's worthwhile to adjust your portfolio mix depending on the market." Leverage swings to the fullest. "I've looked at the market swings as opportunity to invest in stocks that are undervalued with an expectation for growth. --Linda I'd caution you against falling into the classic trap of making drastic changes in your portfolio in order to chase performance. After all, who's to say that as soon as you switch to the value funds that we won't see an upswing again in growth? My quick guide will help you understand what growth and value investing is all about and how to wisely balance the two. The Armchair Millionaire Guide to Understanding Growth and Value
THE BOTTOM LINE: There's always some part of the market in vogue, and another part in the doghouse. But since you can't accurately predict the next darling of Wall Street, stick with a diverse portfolio that covers all of the market. |
