Highlights of the Current Issue
of The No-Load Fund Investor

From The No-Load Fund Investor, 8/08...

A Month of Reversals

What had been strong became weak in July; what had been weak was strong. Through the broad market and the average for stocks funds in our coverage fell only about 1% and 2%, respectively, virtually all of the natural-resources funds we track produced double-digit losses. Meanwhile, financials and healthcare funds produced significant gains, while diversified funds with significant holdings in these two sectors (plus consumer staples) outperformed most other diversified funds during the month.

Updated Market Forecast

In our stock-market forecast for 2008 (“Forecast for 2008,” December 2007), we wrote that we expected “the market’s current above-average volatility to continue” and that we believed “a loss in the range of 5% to 10% is the most likely outcome for 2008.”

So far, the market has done a little worse than even we expected this year. Through July, the S&P 500 Index is down 12.7%

We base our forecasts on the market mainly on factors within several broad categories: the economy, including growth, interest rates and inflation; earnings and profitability; valuation; and investor sentiment.

The market tends to perform best and with the least risk when the economy is growing at a moderate, gently improving rate, especially soon after a recession; when interest rates and inflation are declining, albeit not to levels that imply future economic contraction; when earnings growth is increasing and beating expectations; when profitability is on the upswing; when valuations are low to moderate; and when investors are very pessimistic, often after an extended bear market.

Unfortunately, the market still scores relatively poorly on most of these factors. Let’s take the economy first. After shrinking slightly in the fourth quarter of 2007 and growing less than 1% in the first quarter of 2008, the U.S. economy grew by 1.9% in the second quarter, according to initial government estimates. While that’s an improvement over where we’ve been, it’s still below the 3% to 4% economic growth that seems optimum. Plus, the 1.9% number is likely to have been inflated by the $100-billion-plus in so-called stimulus payments that the government sent to more than 130 million low- and middle-income consumers starting in April.

Model Portfolios

Sample Model Portfolio from the Current Issue
of The No-Load Fund Investor

Wealth Builder Portfolio

Top Twenty No-Loads

Among stock and bond funds rated in Investor newsletter only. Includes low-loads. Lastest 12 Months.

#   Fund                            Obj.       % Change
---------------------------------------------------------
1.  PowerShares DB Comm Idx Track  sector        58.0
2.  iShares COMEX Gold             sector        36.7
3.  PIMCO Commodity RealRet D      sector        31.9
4.  CGM Focus                      agg gr        30.9
5.  USAA Prec Mtls & Mins          sector        23.9
6.  ProFunds Ultra Bear Inv        agg gr        22.5
7.  Rydex-Sect Biotech Inv         sector        21.6
8.  AIM Energy Inv                 sector        19.6
9.  Fidelity Sel Gold              sector        18.2
10. CGM Realty                     real estate   18.0
11. Janus Twenty                   agg gr        17.7
12. Columbia Energy & Nat Res Z    sector        17.7
13. iShares Nasdaq Biotech         sector        16.8
14. Fidelity Sel Energy Svc        sector        16.7
15. Guinness Atkins Global Energy  sector        16.7
16. Fidelity Sel Biotech           sector        16.0
17. GAMCO Gold AAA                 sector        16.0
18. Mark Hard Currency             int’l-gen’l   15.3
19. Price New Era                  sector        15.2
20. US Glb: Gold Shares            sector        14.7