Dear Mr. Berko: What do you think of Jim Cramer's two books called "Real Money" and "Get Rich Carefully," which explain how ordinary investors can make lots of money in the stock market. Also, what do you think about investing $21,000 in Fidelity Advisor Health Care Fund Class A, which sells for about $40 a share?
- KD, Rochester, Minn.
Dear KD: Books claiming to teach folks how to make money in the stock market are for fools. And there are certainly a lot of fools, because these books sell like hotcakes, making piles of dough for authors and publishers. Most stock market books are ghostwritten. They brag about the successes of their ersatz authors, but truth be told, their claims would melt under a simple audit. You can buy books on how to install toilets, the secret to Kickapoo Joy Juice or how to embalm a corpse. Those are just mechanical skills that average adults can replicate with modest degrees of success. Just follow the assembly instructions: "Secure handle A-1 to rotator arm labeled B-1, using the two yellow coded screws. Then solder the red and blue wires to the matching color contact points labeled C-1." Heck, even a teenager from the Shelmikedmu tribe - if he's fluent in English, French or Spanish - can do it. It's basically painting by the numbers! There are innumerous books on baseball, soccer, boxing and tennis that explain everything you want to know about those games. However, not one of those books can tell you how to become a good boxer, a skilled shortstop or a top tennis player. Those skills are part of your genetic code; either you have the gift or you don't - and 99 percent of us don't. And so it is with books on how to make money in the stock market.
Fidelity Advisor Health Care Fund Class A (FACDX-$43.36), with a $2 billion portfolio, invests in companies engaged in the design, manufacturing and sale of products and services used in the health care industry. FACDX has superb one-, three-, five- and 10-year performance records and an equally impressive 13.4 percent annual performance since its inception in 1997. Making big bucks in the health care industry is as easy as falling off a piece of cake, because the operating culture at Medicare and Medicaid is perversely polluted. These programs are managed by political (often crooked) appointees and staffed by low-skilled, overpaid government employees, few of whom have incentive to excel in their jobs. Making huge bucks in the insurance side of this industry is easy, too, because the private, for-profit insurance companies are niggardly in their reimbursements. Anthem, UnitedHealth Group et al. are required to make as much money as possible for their stockholders. And if revenues, incomes and dividends of one of these insurers fail to meet expectations, the CEO may lose his job. This is a Catch-44, which is twice as bad as a Catch-22.
FACDX has an impressive 17-year total return record; it also has a 5.75 percent front-end load and a high 1.08 percent expense ratio, including a 12b-1 fee of 0.25 percent. However, the following Fidelity funds, each of which invests in health care issues, are no-load, have no 12b-1 fees and have annual expense ratios between 0.76 and 0.83 percent.
Fidelity Select Biotechnology Portfolio (FBIOX-$251.49) invests in biotechnological products and services and has averaged over 13 percent annually since inception in 1986.
Fidelity Select Health Care Portfolio (FSPHX-$235.65) invests in companies that design, make and sell health care products and has averaged better than 13 percent annually since its inception in 1982.
Fidelity Select Pharmaceuticals Portfolio (FPHAX-$23.33) invests in pharmaceutical companies and has earned a 13.2 percent annual return since its inception in 2001.
Fidelity Select Medical Delivery Portfolio (FSHCX-$89.21) invests in hospitals, nursing homes and HMOs, providing investors with a 13.1 percent annual return since its inception in 1987.
And Fidelity Select Medical Equipment and Systems Portfolio (FSMEX-$38.56) invests in companies that make, design and sell medical equipment and devices. Since its inception in 1999, its annual return has exceeded 13 percent, too.
A long-term investment of $4,000 in each of those funds might do better for you than any how-to book on the stock market.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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Published: Thu, May 07, 2015
