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The Honolulu Advertiser
Posted on: Sunday, November 17, 2002

How would you invest $25,000 in today's market?

Advertiser Staff


We asked the financial professionals listed below what they would recommend to a theoretical investor who inherits $25,000 and wants to put it into stocks, mutual funds or bonds to increase the value over the next three months.

They selected five investments of $5,000 each on Sept. 12. The chart shows the value of those investments, as of the close of the market on Friday. They are only allowed to make changes once per month. The rules put limits on the professionals that would not normally apply, and their performance must be viewed with that in mind.

Investing over a short period is risky, and this is not intended to suggest these investments are appropriate for any individual.

The participants were asked to give a comment on their picks and what they would do differently if the investments were for the long term. The date the comments were submitted is included in the chart.

Before investing in any security, it's important to evaluate your current financial situation and your long-term goals. In many cases, reducing credit-card debt or other debt would be a better use of any windfall.

The selections are those of the money managers listed and not The Honolulu Advertiser. The results do not include commission charges.

Larry Goeas, who participated in the earlier columns, has asked not to be included in future columns.

If you have any questions or comments, please contact: David Butts, assistant business editor, 535-2453 or dbutts@honoluluadvertiser.com.

• • •

Roberta Lee-Driscoll
Certified financial planner
1000 Bishop St., Suite 509
Honolulu, HI 96813
Explaining the picks

Last week the Feds lowered interest rates. While this usually raises the value of the bonds it does create re-investment risk for current bond holders. Reinvestment risk is the possibility that your cash flow (bond income) will not be re-invested at the same rate of return or interest rate as your current investment. (Nov. 15)

Long-term strategy

One method of diversifying your risk is to buy mutual funds. You can buy stock or bond mutual funds or a combination of both. Mutual funds allow you to buy many stocks or many bonds instead of just a few. There are over 10,000 mutual funds for you to choose from. (Oct. 25)

Alan Matsuda
Certified financial planner
606 Eaea Place
Honolulu, HI 96825
Explaining the picks

Rumblings of war and the Japanese buying lots of gold have fueled a gold rally.  SGGDX ranks in the top 1 percent in its category for one-, three- and five-year periods. In the 1 1/2 months before this game started, it gained 31 percent.  Alas, it plummeted 17 percent thereafter. (Nov. 8)

Long-term strategy

The hydrogen fuel cell is developing fast and may replace the car engine within a decade or sooner, ending our reliance on foreign oil. Its exhaust is only water.  All major automakers are investing heavily in new technologies, certain that a revolution will occur. Risky, so don't invest too much or too early.  (Oct. 31)

Jim Rogers
Brookstreet Securities Corp.
419 South St., No. 121
Honolulu, HI 96813
Explaining the picks

This week was especially volatile for the stock market. The mutual funds that I chose for this exercise have exceptional managers. Even so, the declines in the markets have proven to be a difficult obstacle to achieving positive performance. Should equities have a year-end rally, I believe these funds will perform well.
(Nov. 8)

Long-term strategy

The week of Nov. 4 was packed with developments that impacted the markets greatly. They were an election, an interest rate cut (larger than I expected), and a UN resolution on Iraq. Talk of deflation (decline in general price levels, often caused by a reduction in the supply of money or credit) is somewhat worrisome. (Nov. 8)

Bob L. Slate
Slate Financial Services
45-315 Lilipuna Road, A303
Kane'ohe, HI 96744
Explaining the picks

We are encountering resistance near the September highs. I believe the markets should retrace some of it's gains, and then continue higher late in the year. Normally, I would be going to a neutral bias in anticipation of a pullback, but since the challenge ends next month I will go a little more aggressive. (Nov. 4)

Long-term strategy

The outlook for the market is better. We have had some impressive gains over the last few weeks. The market sprinted out of the gates, but we must remember the race is a marathon, so I would look for the market to take a breather around here. The timing and length of a pullback is debatable. I would also remind investors that not much has changed in the macro economy. (Nov. 4)

Colin K. Watanabe
Branch manager
National Securities Corp.
1001 Bishop St.
Pacific Tower 1530
Honolulu, HI 96813
(808) 522-9000
Explaining the picks

CSCO is very well-managed, maintaining healthy margins of more than 65%. COST announced 2% same store sales increases for October. It remains the best positioned retailer in its market segment. GE: Analysts speculate that the company may have to provide up to $5 billion to its financial services division. TMEN: continues to trade lower as it awaits acceptance of its technologies. (Nov. 8)

Long-term strategy

The larger-than-expected 1/2 percent interest rate cut is seen by many as a sign that the U.S. economy is vulnerable. Employment and consumer confidence are in fact weakening. Howver, Fed policy, inflation and productivity remain accomodative. I am cautiously optimistic.   Barring any geopolitical surprises, I expect to see economic growth sometime in mid-2003. (Nov. 8)

Mario Yim
Raymond James
1221 Kapiolani Blvd., Suite 6E
Honolulu, HI 96814
Explaining the picks

This relatively quick rise in market values in the last few weeks have obviously hurt the performance of my bond fund and market short fund selection. Despite this, we feel still feel these holdings will continue to do well as a defensive investment. (Nov. 2)

Long-term strategy

There is still more downside risk in the overall market. We're in a trading range in which active traders would probably do better than the buy and hold investor. Obviously, the limited monthly trading restrictions in this contest prevents active trading. If this is the bottom, then a retest of the recent rise will be needed. There will be ample opportunities for long investors to buy in at lower levels. (Nov. 2)