Posted on: Sunday, September 28, 2003

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

Advertiser Staff

The Advertiser asked five 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 prospectus.

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.

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

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
August 2003 offered investors a sixth consecutive month of equity market gains. As of early September, the Standard & Poor’s 500 Index was up more than 30% since reaching a five-year low in October 2002. Most of the gains have come since March. Generally optimistic sentiment, fueled by a sense that the U.S. economic recovery and corporate earnings growth are for real, has continued to propel equities. In spite of this news, lots of people are still waiting “for the bottom” before getting back into the market. Now more than ever is the time to put together your investment game plan for the next 10 years.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	Bishop Street Equity Fund, BSEQX Bishop Street Strategic Growth Fund, BSRIX
COMMENTS
As the third quarter wound to a close the stock market began to run into two headwinds: extended valuations and economic concerns. Regarding valuations, dramatic advance in stocks since March probably took prices too far, too fast, and a modest retrenchment isn’t that surprising. Regarding the economy, the persistent lack of job creation has increased concern about the vulnerability of the current recovery. Despite these headwinds, both the market and the economy are doing much better than most forecasts at the beginning of the year, and there is still reason for cautious optimism looking out into 2004.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	Geron Corp., GERN Introgen Therapeutics, INGN Microsoft Corp., MSFT Imclone Systems Inc., IMCLE
COMMENTS
It was a good month for this portfolio, in particular the holding of Geron. I have been following this stock for years, having first become interested in it because of their work with Telomerase inhibitors. Geron is a stock that requires a great deal of research and study to understand the risk and reward ratio. On Tuesday, the portfolio held 5,085 shares when the stock rallied significantly. It went way beyond my short-term price goal and I liquidated all but 100 shares for this account. Even though there was a nice profit, in hindsight, I sold too early.

THE ADVISOR
PERFORMANCE AND TOP PICKS
	LandAmerica Financial Group, LFG TALX Corp., TALX Chiron Corp., CHIR Dodge & Cox Stock Fund, DODGX Pioneer High Yield Fund, TAHYX
COMMENTS
I really like the spectacular Warren Miller films about extreme skiing, snowboarding and surfing. What a thrill to watch skiers and snowboarders dropping vertically off high peaks and cliffs or tow-in surfers dropping down the face of a 70-foot wave at Peahi. Wow! I love to watch it, but there is NO WAY I’m going to do that! It’s the same with extreme speculation in the financial markets. I can admire extreme tolerance for risk and potential loss. But for most of us, and for our hypothetical couple, a properly allocated, long-term portfolio remains the way to the goal.

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
When setting up this portfolio, stocks were chosen that met the following criterea: Price/earnings less than the stock’s four-year historical average, PEG ratios below 1.5, historical and expected five-year EPS growth rates greater than 12 percent. By using those criterea, we made sure that we didn’t overpay for the stocks in the portfolio. We were able to get stocks that were selling at a good value and they have proven themselves so far.