PORTFOLIO DIRECT BY ART BONNEL
Hello. This is Art Bonnel, portfolio manager for the Bonnel Growth Fund.
Today is April 7, 1997.
On Friday, April 4, the government reported that unemployment had reached
the 5.2% level. Investors are now worried that this may cause the Federal
Reserve Board to continue to raise interest rates. Because of the recent
increase in rates by the Fed, the Dow Jones Industrials have corrected over 600
points and NASDAQ close to 200 points. As we pointed out in the last Portfolio
Direct, be prepared for a correction of five to ten percent. Corrections are
just a normal and healthy part of the market. They happened before, one is
happening now and they will happen again. All corrections seem acrimonious which
they are happening but they provide us some wonderful opportunities to acquire
some great companies at bargain prices. How much farther will this correction
carry? Only time will tell. But it will end. The stock market does what it wants
to do when it wants to do it. Trying to accurately forecast short-term swings is
non productive. Long term the market is in a strong up trend. Because of the
short term unpredictability of the market, we are going to maintain a fully
invested position. We are not going to attempt to time or trade the market. All
we want to do is be invested in what we consider quality companies.
April is going to be a very busy earnings driven month. The first quarter
earnings reports will give us an idea of the strength in the economy. We have
not taken any major positions recently in anticipation of the news releases.
Hopefully most of our companies continue to show positive results. If they do
not meet our expectations, we will exchange then for something else. Our focus
will more than likely continue to be on technology, health care and various
forms of retailing. This is always an exciting time of the quarter and
especially since we are in a correction. There are some real bargains out there
and we hope to pick up a few of them.
The Bonnel Growth Fund continues to be diversified in many industries. As I
mentioned a moment ago, we continue to favor technology, health care and
retailing. Technology would be considered our largest industry holding. Some of
our larger issues now are Minnesota Mining and Manufacturing, Sears, Exxon,
McDonalds and Intel. Some issues having a smaller percentage of the portfolio
would include Applied Magnetics, American Power Conversion and Seattle Film
works. Earnings are going to be announced on most of these before the next
update and these issues are going to be reevaluated. They may be sold if
information is released which would be considered detrimental to earnings
growth. The best system for investing in the market may just be our ABC
Investment Plan. This is our monthly dollar cost average plan. This way you do
not need to try to time the market. No system can guarantee a profit, especially
if you sell at a low, but this should diversify your risk and get you started in
an automatic savings program.
Thank you for your interest in the Bonnel Growth Fund. The next update is
scheduled for mid May. The big question of course is what is going to happen to
interest rates by then.
If you would like to receive more information about the Bonnel Growth Fund
or any of U.S. Global Investors other no-load mutual funds, please remain on the
line and our Representative will assist you.
To listen to reports from our other portfolio managers, please press star
now. Thank you and good bye.
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ANNOUNCEMENT 159
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