June 2008

If you’re wondering where the next rally will begin (whether you beleive it will be a bear market rally or the next bull market), it is a good idea to watch the VIX index.? As you can see from the chart below, medium-term lows for the SPX (S&P 500 Index) coincide with upward spikes in the VIX.? At current levels, we don’t have a spike, though this isn’t a precise indicator of timing.


You can track the VIX at the usual places.

It’s worth a quick note that a few great actively managed mutual funds have re-opened for new investors:

  • DODGX – Dodge & Cox Stock Fund – large cap value
  • LLPFX – Long Leaf Partners – large cap blend of growth and value
  • SEQUX – Sequoia – large cap growth
  • TASCX – small cap blend of growth and value

These mutual funds closed to new investors at various points in the past because their fund managers did not feel that the existing fund holders would benefit from new investors rushing in when performance was hot.? It’s not too common that a fund manager sides with their existing fund holders rather than growing their assets under management (more assets = more fees), so it’s worth noting when a manager does the right thing.

They’re all off their highs from last year, but for long term holdings, these mutual funds are a good bet.