America History

America History

Do Bear-Market Veterans Manage Better in a Downturn?
Bridget B. Hughes, CFA
Thursday March 12, 2009, 7:00 am EDT
Buzz up! Print Related:American Growth D, American Funds American Mutual A, Armstrong Associates
As the markets continue to crumble, many mutual fund managers are scratching their heads. They say the markets aren't recognizing some companies' good fundamentals, including resilient earnings figures, strong balance sheets, and stable cash flows; and, they say, it's simply fear that has gripped all corners of the market. In coming to grips with their own funds' performance, many note that the current stock market environment is unprecedented in our professional lifetimes (unless, of course, you are 100 years old and worked during the crash of 1929)

{"s" : "amrgx,amrmx,armsx,dodgx,fkdnx","k" : "c10,l10,p20,t10","o" : "amrgx,amrmx,armsx,dodgx,fkdnx","j" : ""} Technically, those managers are right in at least one regard: The S&P 500 Index has fallen nearly 55% since Oct. 9, 2007--an outcome worse than that of any other bear market since 1929 (when the Dow Jones Industrial Average plummeted more than 80% in less than three years). But there have been some periods with results similarly gnarly to the most recent drop, including the bear market that began in January 1973, which ultimately saw the S&P 500 fall nearly 50%. Granted, there were some other differences back then, including higher inflation and a drawn-out decline. (It's been faster this time around.)

Still, we wondered if funds led by portfolio managers that ran money in the 1970s have been better off in the latest downturn. There aren't many managers that have run the same mutual fund for that long (though more have been investing that long) and some that have are part of a team of managers on those funds. Below is a table showing which stock funds have the longest-tenured managers and some details on some of the best-known offerings.

Click here to view the table....

Similar Essays