Pettit Funds

  My Pettit Energy Fund is currently the #14-performing fund over the last 3 years, according to the Marketocracy site (out of about 70,000 virtual funds followed at the site).

  It has been averaging 36.41% per annum since its inception in January, 2003. 

My energy stock selection this time is Pioneer Drilling Co. (PDC).  The fund already owns some of this, and I’m going to add to my holdings.

Good luck!

   Well, I’m reeling a bit from the beating taken the last couple of days in the market, but…time to get back on the horse.

   I’ve made a little money in the steel industry in the past, so I’m going with Grupo Simec S.A.B. de C.V. (SIM).   It’s a bit larger company than my usual picks, but a little extra diversification will be good for me. 

Good luck!

I whole-heartedly agree with the following–despite it being against the conventional wisdom of how you are supposed to allocate your retirement savings:

Mortgage Your Retirement–A Commentary by Ian Ayres and Barry Nalebuff

November 3, 2005

(This essay originally appeared in the November 14, 2005, issue of Forbes.)

“Conventional wisdom offered to retirement savers is to start out at age 25 mostly in stocks, then wind down to a bond-heavy portfolio at age 65.

“This strategy, we think, is too tame. You should be more than 100% in equities when you are young. An exposure of 200% to start would be a better idea. That’s right–if you are young, you should be buying on margin. Pay down the debt as you age and then ease off to a 50-50 stock-and-bond mix at the beginning of your retirement.

“Margin buying? For retirement? It sounds terribly risky, but it in fact reduces the risk that you will end up poor. And it leaves you with much better diversification across time.

“It is obvious that you’re not well diversified if you invest $100 in one stock, $200 in another and $300 in a third. You’d have less risk investing $200 in each of the three stocks. Indeed, spreading risk over stock is what leads people to buy broad-based index funds.

“The same idea of equal investments applies to investments across time. If you have $100 invested in year one, $200 invested in year two, and $300 invested in year three, you have too much exposure to year three and not enough to year one. This is what you get if you put $100 a year into savings and stay fully invested. You could get the same exposure to the market with less risk by owning $200 worth of stock in each of the three years. You could do this by buying on 50% margin in the first year, paying off the debt with your year two savings, then going to 33% cash or bonds in the third year.

“Most investors have a lot less at risk in their retirement accounts in their early working years than in later years. In essence, they’re missing an opportunity to diversify across time–they’re putting too large a bet on the return on stocks in later years.

“At first, it seems that this is just a fact of life. You can’t have an equal amount invested in all years, because in the early years you can’t invest what you don’t have.

“But this ignores the possibility of leverage….[Rest of article]

Nope. Bill Gates is 5th. It’s only fair to analyze using today’s dollars right?

Interesting article in the NY Times on Sunday with a list of these folks.

Here’s Diff’rent Strokes Gary Coleman–cute as ever–hawking loans. Check out the APR percentage rate at the end of the video…:

  This was my stock pick for Dec. 12, 2006.  It immediately caused me shame when, within a week or so, it drastically missed earnings projections and plummeted.

  I’ve been down as much as 25% since buying it.

  So how nice that it went up 25% today (and put me finally in the black) after reporting record earnings.  I guess it’s a keeper after all.

  I hope the rest of you hung in there.  (Did any stocks go down today?!  I can’t believe it: the Dow closed up 283 points?!!)

  I would love to manage a mutual fund one day, of course.

  Until then, I have my fantasy funds at Marketocracy.  (See links at right sidebar).

  A couple of years ago–when I first put this site up–I was doing a lot of research into starting a fund, and found that there was very little “nuts and bolts” information on doing so.

  Then I found Melinda Gerber’s book–published in 2005.  Everything you need to know. 

  Ms. Gerber’s husband Nicholas runs a mutual fund or two, so she knows whereof she speaks.  This book is a step-by-step of the process.  You’ll need more than the book, of course, but this helps you learn where to find the rest of what you need.

  I just checked the book’s availability at Amazon, and see that it is only available “used” for–get this–$350.00.  I bought it two years ago for about fifty bucks.  Maybe that makes this one of my best investments ever!  (700% in two years!)

  Listen: that’s nuts.  I’m sure you can still get it from Melinda herself by contacting her at JV Books.  If not, let me know–I’ve got her email address around here somewhere.  I had written her an email after I set up this site, and she was kind enough to give me some feedback.

  In any event, this book is The Bible of starting a mutual fund.  Highly recommended.

My last couple of picks–Parke Bankcorp (PKBK) and Conrad Industries (CNRD)–raised a couple of eyebrows here when I posted them. These stocks have had barely any trading activity since I bought them (although they are up 7% and 2%, respectively, in the latest quotes), and I still lack a little confidence in the picks–although you can count on me crowing about them if they do indeed pan out.

On the other hand, my pick from 9 weeks ago–Oppenheimer Holdings (OPY)–is up over 34%. You’re welcome.

So let me get back to the “old ways” and find you a couple of picks here at mid-year: I’m going to buy Genesee & Wyoming, Inc. (GWR), a railroad company that operates in the US, Canada, Australia, and, formerly, Mexico. I’m also going to take a position in Philadelphia Consolidated Holding Company (PHLY), an insurance company. You should, too.

Happy Investing!

   Those acquainted with my personal blog at www.jerrypettit.com/blog are aware that about once a month I recommend a stock there (and these picks are mirrored onto this site). 

   As an “extra” benefit of this site,  I am also going to list my picks for the Pettit Energy Fund (PEF)–the virtual fund that I manage at the Marketocracy site, and which has actually done much better, return-wise, than my Top Ten ranked fund there.  (See links in the right sidebar).

   So my first announced energy stock selection is: Petrobras Energia Participaciones S.A. (PZE).   Good luck!

I’ve written before about the friendly competition between Mr. Buffett and myself for the title of “Oracle of Omaha”. For some reason, he has kept the title year after year and I have resigned myself to just being the “Oracle of Millard” (a quiet, friendly suburb of Omaha).

This despite my “return since inception” (Jan. 24, 2003) for Pettit Mutual Fund #1 (as of June 30, 2007) of 256.42% ( or 33.23% per annum), and for Pettit Energy Fund of 303.07% (or 37.00% per annum).

Buffett’s Berkshire Hathaway over the same time only went up 59.81% (something like 12% per annum).

So imagine how I might whine over this story:

“NEW YORK (Reuters) - A bidder agreed to pay $650,100 to have lunch with billionaire Warren Buffett, surpassing last year’s record for the annual charity auction.

“Mohnish Pabrai, an Irvine, California-based investor who models his investment style on Buffett’s, won the right to dine with the 76-year-old chairman of Berkshire Hathaway Inc. The five-day online auction concluded on Friday night on eBay Inc.’s Web site.

“It was Pabrai’s fifth year of bidding but the first time he won. The top bid surged nearly $250,000 in the final hour….[Rest of article]

***

Now…if you aren’t convinced that lunch with me is a better deal, then there is something wrong with you. I’m setting the reserve for the bidding at a mere 10% of Mr. Buffett’s amount–$65,010. Bidding closes July 15 at 5:00 p.m. Central time. The highest bidder above the reserve amount gets lunch with me. I’ll pick up the tab.

But would you mind getting the tip…?