Adviser pushes diverse investments
Mar. 14--When investing for the long term, market players
should follow the "two D's" -- diversification
and discipline. Those were a couple of recommendations offered
Tuesday by Craig Ueland, president and CEO of Russell Investment
Group
Ueland was the featured speaker during the Friends of Finance
luncheon at the University of Tulsa. He not only spoke about
the purpose and values of his Tacoma, Wash.-based company,
which is a global leader in multimanager investing, but
he touched upon what people should do in long-term investing.
"We're in a people business," Ueland said. "We
research managers for mutual funds; we don't research stocks.
Many people don't fully know that."
Today, more mutual funds are available in the United States
than there are stocks traded on the New York Stock Exchange,
Ueland said.
Mutual funds came into existence because investors coming
out of the Greet Depression didn't want to put all their
money into one basket. The funds provide diversification
and the expertise of a professional manager.
Today, investors can buy mutual funds that focus on specific
sectors such as commodities, telecommunications, biotechnology
and more.
"It's actually just as hard to figure out which funds
to buy as it was 70 years ago to figure out which stocks
to buy," Ueland said.
He noted that Russell is the company behind the Russell
2000 Index, a benchmark for small-company stocks. The firm
is a leader in investment manager research worldwide and
has more than 2,000 associates serving institutional and
individual investors in 45 countries. It's a provider of
investment advice for nearly $2 trillion in client assets.
"The whole reason we're in business is to help our
clients improve their financial security," Ueland said.
For long-term investing, he stresses the importance of
diversification and discipline.
"Because you don't know what's going to do well, don't
put too much of your money in one thing," Ueland said.
"That's really simple -- diversify your portfolio."
In 2001, just after the technology bubble burst, Ueland
was speaking to a Rotary club in Seattle when someone asked
when he thought tech stocks would make a comeback.
"In the history of the United States stock market,
it has almost never happened that two consecutive bull markets
are led by the same sector," Ueland said.
People in the energy belt probably know that as well as
anyone, he said, noting that cycles affect energy stocks,
technology, real estate and other sectors.
"What goes up does not stay going up."
Investors also need discipline, which is so hard, because
investors get excited, Ueland said.
But investors don't know when various sectors are going
to peak or when the Dow Jones industrial average is going
to drop. Tuesday was a perfect example of that, with the
Dow falling more than 240 points, or almost 2 percent.
Ueland also advises against buying what's been hot and
encourages investors to buy low and sell high.
"I don't move money from an asset class that has performed
poorly into an asset class that has performed well if the
one that I'm moving into has outperformed the one I'm moving
out of over the past three or four years," he said.
A good financial adviser or investor leans against the
wind and then invests for the long term.
"You don't want to take more risk then you can afford,"
Ueland said, "but you do want to take as much risk
as you can afford."
