Posted on: Sunday, August 31, 2003

How would you invest $100,000 in today's market?
Investment portfolios

Advertiser Staff

The Advertiser asked six of Hawai'i's financial professionals to create $100,000 investment portfolios for a theoretical client starting on April 1.

Today we report on how the portfolios have performed as of the close of the market on Friday and what the professionals who built them have to say about the market.

The professionals were asked to invest for a fictitious client who is 50 years old, a woman, married (husband is also 50 and wants to retire at 65), with a joint income from all sources of $150,000.

They have a net worth (including their home) of $1.3 million, and their assets owned for investment total $400,000. They are in the 31 percent tax bracket and want this $100,000 to be invested for growth.

These portfolios should not be viewed as recommendations. Selecting the right investment for you depends on your current situation, goals and tolerance for risk. Before investing you should consult with a professional and read all relevant prospectuses.

The theoretical portfolios were limited to purchases of U.S. stocks, mutual funds and certain bonds. A flat $25 commission is charged on most trades. Below we list a sampling of each professional's holdings as of last week.

One of the participants, Orest Saikevych, of Central Pacific Bank, asked to be removed from the column this month. He said, "We recently significantly expanded our asset management division, which, among other things, has resulted in major changes in our management style and philosophy. Under these circumstances, we do not believe that our continued participation in The Honolulu Advertiser's contest under the rules can accurately reflect the true nature of our results, forcing us to withdraw."

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

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THE ADVISOR
PERFORMANCE AND TOP PICKS
	AXP Intermediate Tax-Exempt Fund Class A, INFAX Strong Large Cap, SLCRX Liberty Acorn Fund Class A, LACAX Franklin Mutual Beacon Fund Class A, TEBIX Templeton Foreign Fund Class A, TEMFX
COMMENTS
For perspective, let’s go back in time to 1993 and invest $10,000 in a Dow Jones Index fund. Now let’s endure the rough road. The tech bubble bursts, terrorists shock the world, corporate scandal runs rampant, and America goes to war. Perspective? The Dow Jones was at 3,600 in 1993. It is at 9,400 today. In spite of the bumpy ride, my $10,000 would be worth over $25,000 today. By also investing $100 a month, the account would be over $41,000 today. Keep it simple. Focus on long-term goals and let the market take care of itself.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	Bishop Street Equity Fund, BSEQX Bishop Street Strategic Growth Fund, BSRIX New England Tel 7.875 2029 Phillips Pete Co 7.125 2028 Safeway 9.65 2004
COMMENTS
Despite continuing gains in the stock market, the real fireworks in the financial markets since June have been in bonds. Having misinterpreted the Fed’s monetary signals, investors engaged in a furious selling following the Fed’s decision on June 24 to hold rates steady. Interest rates on 10-year Treasury notes rose from a low of 3.1 percent to around 4.2 percent currently. At the same time, the real economy has shown reassuring signs of strength, and corporate profits are recovering. The current environment looks like a classic economic recovery: rising interest rates, steady economic progress, and a strong stock market.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	Intel Corp., INTC Geron Corp., GERN Introgen Therapeutics, INGN Microsoft Corp., MSFT Imclone Systems Inc., IMCL
COMMENTS
It was a slow month for the equities markets, in general. The trading last week was marked by low volume. This is usually the case as people take a vacation before school starts. During periods of low volume, volatility can rise dramatically. Next we go into September and October which can bring back unpleasant memories for some. But, before the October 1987 severe market correction (crash), these fall months have caused cash shortages before. Especially when we were primarily an agrarian economy. Farmers needed funds to pay for labor and equipment to finance the fall harvest. This year, I’m optimistic.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	LandAmerica Financial Group, LFG TALX Corp., TALX Taro Pharmaceuticals Industries, TARO Dodge & Cox Stock Fund, DODGX Pioneer High Yield Fund, TAHYX
COMMENTS
When planning for retirement, keeping a keen eye on risk and avoiding the “big mistake” are crucial. Each year it becomes harder to overcome losses. Our hypothetical couple, both 50 years old, have 15 years before retirement and perhaps another 30-40 years in retirement. Happily, for them, the future is a long time. They have no need to speculate or take on high-risk strategies. For most of us investing should be an organic process rooted deeply in our financial plan. Think of it as a well-planned and well-tended garden. Healthy trees bring shade and fruit for many years.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	SEI Investments SEIC Chico’s FAS Inc., CHS Home Depot Inc., HD Harley-Davidson Inc., HDI Shuffle Master Inc., SHFL
COMMENTS
As the market continues to move upward, you may be thinking about investing some of your money that’s been sitting in savings accounts. One investment you may be considering is an annuity. Annuities are one of the most complicated investments around, for they are not all created equal. While many feel their annuities are “safe,” the bigger question may be, are they liquid? How soon can you get your money out of it, and how much of it can you get without a penalty? The “surrender charge” annuities charge vary tremendously. Before you invest, be sure you understand all of the terms.