Resource Sector Reigns in February

We've noted in our weekly Break Out Report that oil and gas stocks continue to make new highs. And we've noted a smattering of gold stocks starting to make new highs. Not surprisingly then, February was dominated by natural resource, precious metals and energy funds.

Thirteen of the Top 25 Funds for one month as tallied at The Vancouver Sun website are natural resource funds. Four more are energy funds. Three focus on precious metals. The natural resource funds generally include a mix of energy and precious metals stocks.

The remaining five are specialty funds - four of them Friedberg Funds (specializing in hedging, currency trading and futures markets) and the last a bear fund. And man is that bear growling!

Looking at three month performance, we see the same kinds of funds on top - energy, resource and specialty funds. Many, in fact, are the same funds.

The high flying tech funds of previous years are suffering massive losses. If we look at the ten worst performers for the year to date (to March 14) we find:

Fund name	YTD % Loss
Northwest Specialty Aggressive Growth	-44.53
Mackenzie Universal Internet Tech (US$)	-44.09
Mackenzie Universal Internet Tech Cap Class	-43.48
Mackenzie Universal RSP Internet Tech	-42.23
Mackenzie Universal Internet Tech	-42.11
First Trust DJ Internet Index 99 (US$)	-41.73
eFunds Bloomberg U.S. Internet	-40.06
First Trust DJ Internet Index 99	-39.81
TD Global e-Business-A	-37.70
IMS Information Technology	-37.48

Note that eight have the word Internet or eBusiness in them. In fact, of the top 50 losers for the year-to-date, fourteen have the words Internet, eBusiness or new economy in them. The vast majority of the rest call themselves technology or telecommunications funds with a few growth funds thrown in.

When will the tech slaughter end? Logically the bear market will end when all the would-be sellers have sold. When the market is most pessimistic. When there seems to be no hope in sight. Are we there yet?

Maybe. Consider these recent headlines in the newspaper: Pessimism Consumes Markets - front page of Tuesday's National Post, Analysts Fear No End in Sight for Market Plunge - lead business story in Tuesday's Vancouver Sun, Stock Carnage Continues - yesterday's Globe & Mail, and so on.

The gloom is nowhere close to universal - we did see headlines like Economy Set to Roar Back yesterday, but the mood is definitely getting darker.

My opinion? We ain't see the bottom yet! For tech stocks, of course - resources and selected value stocks still are on the move upward. In fact, Norm Rothery, the guy behind the fascinating Stingy Investor website, recently commented "I guess we must be in a bear market. Personally, I've not noticed since value is having a rather good year." As a value investor, he has done very well amid the carnage.

For an idea of how bad it may get (hopefully it won't), take a gander at Jeff Walker's table comparing the NASDAQ crash with the Dow crash of 1929 at Lowrisk.com. It is truly a startling chart.

Keep your powder dry. Cash, energy, precious metals and solid, profitable old economy stocks are the place to be right now.

Rank	Fund	Type	1 Month	3 Month	1 Year
1	Friedberg Diversified Fund	Specialty	27.72%	52.39%	-5.34%
2	Friedberg Equity-Hedge Fund	Specialty	21.11%	-8.98%	4.01%
3	StrategicNova Canadian Natural Resources Fund	Resource	15.68%	16.48%	n/a
4	StrategicNova Canada Dominion Resource Fund	Resource	15.30%	25.56%	n/a
5	Friedberg Futures Fund	Specialty	14.16%	44.25%	11.34%
6	MRF 2000 Limited Partnership	Energy	12.46%	4.39%	n/a
7	Friedberg International Securities Fund	Specialty	12.08%	15.70%	22.09%
8	Dominion Equity Resource Fund Inc.	Resource	11.63%	21.99%	75.23%
9	Sentry Select Canadian Resource Fund Ltd.	Resource	11.21%	22.84%	n/a
10	MRF 1999 Limited Partnership	Energy	10.01%	15.23%	n/a

Just when we thought it couldn't get any worse, the number of Power Performers were cut in half once again from two to one. Just the Resolute Growth Fund stayed the course. This is the only fund managed by Thomson Kernaghan & Company.

One fund makes for a pretty small chart, so we created an additional chart called the Strong Performers with a 15% return in each time frame as criteria. Only three funds made that one. Still slim pickin's.

Resource Sector Reigns in February!