A mutual fund is typically fashioned by an investment firm. The whole thing is publicized and the share holders are then encouraged to put their money in this mutual fund.

Fourth Quarter May Be Worth Whole Year

In his article "Mutual Funds: Investors are hoping for another Fourth Quarter Cornucopia" in the Salt Lake Times, Bloomberg news columnist Chet Currier examines the historical tendency for fourth quarter earnings to have the greatest impact on overall investment positions.

Citing his own Bloomberg news service as his source, Currier said that the Standard & Poor's 500 index showed the largest margin of improvement in the fourth quarter for six of the past ten years with only one fourth quarter, that of 2000, resulting in a substantial decrease of 8.1 percent.

Using a simple average to look at fourth quarter earnings from 1996 to 2005, Currier calculated an approximate gain of 7.8 percent for the fourth quarter in comparison to 2.7 percent for the second, one percent for the first, and a 3.9 percent loss for the third quarter.

Apparently those investors willing to weather declining numbers for a portion of the year and who will sit out the fourth quarter often see gains that are enou gh to make their investment profit for the year. Using compounding, Currier pointed to an October-December average annual climb of 35 percent for the S&P 500.

The bulk of Currier's article examines possible explanations for this seemingly skewed earnings pattern. He does point out that once such patterns become evident they tend to be negated by investing behavior in response to the new information but says that the market "finds a way to keep doing that [rising} at one time or another."

The full text of Currier's comments can be found at sltrib.com.

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