Diversification Helps Many Stay Ahead of Game Bruce Fenton speaks with The Wall Street Journal
Bruce Fenton, president of firm Atlantic Financial Inc.
By Karen Talley Dow Jones Newswires
The Wall Street Journal
NEW YORK -- This year's much-remarked-upon drop by technology shares is obscuring a less-discussed fact: Small-stock investors who like the spice of diversification are doing quite well.
Since 2004 began, eight out of 10 sectors that make up the S&P Small Cap 600 Index are showing advances.
With a gain of 36%, energy is the best-performing group, not surprising given the rise in crude-oil prices. But materials stocks are also doing well, ahead 19%, while the S&P 600's third-best-performing sector is financials, up 12%.
Of the two groups that are down, technology is the leader with an 11% loss.
This is the year to be an investment chameleon, not sticking to one particular tack. "In 2004 we've been dealing with a tremendous amount of fear and uncertainty," said Bruce Fenton, president of investment firm Atlantic Financial. "It's been important to spread your money over a lot of areas to reduce risk."
Investors appear to be betting on oil to keep rising. Small stocks in the group that have recently been doing well include Cimarex Energy, Frontier Oil, Atwood Oceanics and Dril-Quip (which hit a 52-week high Friday, finishing with a 4.4% gain), all trading on the New York Stock Exchange.
Financials that have been doing well of late include Riggs National, World Acceptance, Cash America International and LandAmerica Financial Group, with the latter two trading on the NYSE.
Friday's Market Activity
Small-stock indexes rose for the fourth straight week, this time with much of the gain coming on Thursday and Friday as tech shares rallied.
The Russell 2000 Index of small stocks rose 3.73 to 569.91 Friday, and advanced 2.5% for the week. The S&P Small Cap 600 Index gained 1.8 points, or 0.63%, to 288.67 on Friday, and 2.2% for the week.
NetSolve jumped 1.94, or 22%, to 10.84 as large cap Cisco Systems agreed to acquire the Austin, Texas, remote network provider for $11 a share.
Visteon (NYSE) tumbled 1, or 11%, to 8. The Dearborn, Mich., auto-parts supplier said it overestimated the level of production at Ford Motor by 100,000 vehicles and it no longer expects to be profitable for the year.
Volterra Semiconductor surged 2.63, or 25%, to 13.10 and is now up roughly 60% over the past two sessions, after Goldman Sachs became the latest Wall Street firm to chime in on the Fremont, Calif., company's growth prospects.
13 September 2004
(Copyright (c) 2004, Dow Jones & Company, Inc.)