Boyd's Bets: Fidelity Growth Funds

03/28/2017 2:50 am EST

Focus: FUNDS

John Boyd

Editor, Fidelity Monitor & Insight

There seems to be little “trust” in the market; the higher it goes, the more worried investors are that it  is headed for a fall. And that is a very good thing, states John Boyd, editor of Fidelity Monitor & Insight.

Yet there seems to be little “trust” in this advance. The higher the market goes, the more worried investors are that it  is headed for a fall. And that is a very good thing.

This bull market is unlikely to end in fear, when everyone is doubting its strength, but in euphoria, when everyone thinks it can only go higher. Today, despite the strong advance, we are much closer to the former than the latter.

Despite many pundits calling the latest rally driven by nothing but hope, it is, in fact, being supported by improving economic fundamentals and improving corporate earnings. The four week moving average of initial claims for unemployment fell to 241,000 as of February 18, the lowest level since July of 1973!

That is not to say, of course, that the market could not stage a retreat in the near future. The market can always do that, and there are any number of things that could cause such an event. But given the strong backdrop supporting stocks, we would not view any selloff as the beginning of a new bear market.

As long as the economic data continues to show signs of strength, we will continue to like stocks. Let me leave you with this nugget from longtime market watcher, Sam Stovall.

Since 1945, he notes, there have been 28 instances where the S&P 500 has registered gains in both January and February. In the prior 27 cases, we ended the year with a positive total return.

Of course, since we are already up 5.9%, we could be down for the balance of the year and still end up with a positive full year for a 28th straight time. More intriguing, however, is the average yearly gain in those past 27 occurrences of 24%. Here are some idea for growth investors:

For large cap exposure, Fidelity Blue Chip Growth (FBGRX) and Fidelity Growth Company (FDGRX) are aggressive options, while Fidelity Contrafund (FCNTX) is more conservatively positioned.

Fidelity Large Cap Value Enhanced (FLVEX) provides financial exposure; Fidelity Growth Strategies (FDEGX) adds mid-cap exposure. Fidelity Event Driven Opportunities (FARNX) and Fidelity Small Cap Enhanced Index (FCPEX) are smaller-cap choices that enhance portfolio diversification.

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