If the euro strengthens against the dollar, it could have a decidedly mixed effect on U.S. stocks, predicts Sy Harding's Street Smart Report newsletter (169 Daniel Webster Highway, Meredith, NH 03252). "A weaker dollar translates into lower prices for U.S. goods in foreign markets, eventually a positive for U.S. business and stocks. Short-term, however, it's likely to produce foreign capital outflows, even increasing the potential for a panic rush for the exit by foreign capital."
Needham Growth Fund's 32.5 percent average annual gain over the past three years is the second-best performance among all mid-cap stock funds. Needham plays both ends of the growth/value split by focusing on rapidly growing companies that have fallen momentarily on hard times. Its use of options has also made it one of the sector's most tax-efficient funds. Recent favorite stocks: Motorola, Computer Associates International, Honeywell, Boeing, Coherent, AT&T.
Early 2002 will be a transition period for the medical device industry, says Standard & Poor's Outlook (55 Water St., New York, NY 10041). "We're excited about the prospects for meaningful technological advances in such areas as congestive heart failure, vascular disease, robotic surgery, orthopedics, diabetes management, artificial organ implantation and medical imaging. Such advances promise dramatic improvements in patients' lives and lower treatment costs." The Outlook's favorite beneficiaries: ArthroCare, Baxter International, Biomet, Intuitive Surgical, Johnson & Johnson, Medtronic, Mentor, St. Jude Medical, STERIS, Tyco International, Varian Medical.
To lessen the uncertainty of stock picking, Smart Money magazine (1755 Broadway, New York, NY 10019) recently went looking for issues whose earnings have proven highly predictable in the past. It then screened for those whose future earnings analysts most agree on, and which carry the highest current analyst ratings. The eight picks, says Smart Money, are "highly profitable, fast growing, undervalued and seem recession-resistant": CACI International, Coach, Medicis Pharmaceuticals, O'Reilly Automotive, RehabCare Group, Respironics, Ruby Tuesday, Varian Medical.
Spreads between yields on municipal bonds and Treasurys are so wide now that even investors in lower tax brackets and low-tax states should consider munis, says Money magazine. "Last year's tax cuts don't diminish munis' attractiveness. An investor in the still-hypothetical 35 percent top tax bracket (scheduled to take effect in 2006) would enjoy a tax-equivalent yield of at least 6.62 percent on today's 10-year AA muni."
Looking to add some stability to your fund portfolio? Consider balanced funds, advises Personal Finance newsletter (P.O. 3808, McLean, VA 22103). "They typically put 75 percent of their assets in stocks and 25 percent in bonds. This provides capital-appreciation potential, income and some protection against stock-market meltdowns." PF's favorite balanced funds are both no-loads: Oakmark Growth and Income (1-800-625-6275; 26.5 percent, 14.3 percent and 17.3 percent average annual returns over the past one, three and five years), and Dodge and Cox Balanced (1-800-621-3979; 21.6 percent, 11.4 percent and 14.3 percent).
Site of the Week: The Closed-End Fund Association; www.closed-endfunds.com provides statistics on more than 500 exchange-traded funds. Use the custom-search option to scan data by preferred criteria, adviser, asset classification and expense ratio. You can also research top holdings, returns and manager information.
Investor's Notebook is a digest of investment opinion from the world's leading financial advisers. It does not recommend any specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.