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Strategies & Market Trends : Fidelity Select Sector funds -- Ignore unavailable to you. Want to Upgrade?

To: Angler who wrote (3980)	10/3/2001 6:38:21 AM
From: MoneyPenny	Read Replies (2) \| Respond to of 4916

I think that the capital gains distributions on all funds will be enormous this year. Much has been sold recently to meet redemptions. Funds do not want certain names on their portfolio even though they might be good long term investments so out they go at the end of any quarter. Many smaller funds have been hit very hard. Some of the hot funds have liquidated. There is no safety at this point in spreading risk in a sector fund. I would especially avoid biotech. There is much discussion of this point in many media, CNBC, WSJ, etc. not just Market Watch. Just do some digging. It has always been true of biotech firms: a few do very well, many just burn cash in their research and come up empty. It was an attractive area for investors looking for great returns for the extra risk when people were buying high tech without regard to valuation, profitability or pipeline, but now, people want a little more certainty. My point is that with a mutual fund like fbiox, it must spread out its bets. With fidelity's excellent research they might be able to put together a fantastic basket of their 10 to 20 best ideas but the funds charter prevents them. My current thinking is that the pharmaceutical select will have a better chance of containing concentrated winners than biotech. The volatility at least should be more restrained. I like MLMN and may return to it when the market calms down. I'm happy with my cash, I hold no mutual funds in taxable accounts at this point so taxes should be restrained.