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BOSTON — Playing it safe paid off in 2008 for Tom Forester and David Ellison, two standout mutual fund managers in a year when winning meant losing less money than the competition.

Forester’s eponymous Forester Value Fund (FVALX) focused on stocks that typically do well in recessions to roughly break even for the year, declining just 0.82 percent through Tuesday — easily making it the top-performing large-cap value fund of the year, according to Morningstar Inc. data. The second-place Copley Fund was down nearly 17 percent, which was still well above the average decline in the category of 38 percent.

Ellison’s FBR Small Cap Financial Fund (FBRSX) also stood out in 2008, ranking No. 2 among financial sector funds. It shed just 10 percent of its value, easily beating the category’s average decline of 45 percent.

If the economy is poised to turn around, Forester and Ellison might do well to heed the contrarian investment maxim that yesterday’s winners are likely to be tomorrow’s losers.
But the two managers — both of whose funds carry Morningstar’s five-star ranking — aren’t yet ready to budge from the approaches that served them so well in 2008. Neither sees enough positive economic news to merit shifting from investments that typically do OK in recessions to those more likely to gain when conditions improve.

"I’ll probably be in some of the same stocks for the first six months or so of 2009," said Forester, whose recent success has drawn new clients and boosted his fund’s assets more than fivefold since the start of 2008, to $55 million. "And then as I see things getting better, I’m going to shift out of the real defensive things, and get more constructive on the more cyclical stocks that can grow quite well as we come out of this period."

The fund’s top five holdings as of Sept. 30 included Kraft Foods Inc., Johnson & Johnson and H.J. Heinz Co. — three companies that managed to outperform broader markets for the year, with their shares all losing less than 20 percent cash advance no fax. Other 2008 investments included Wal-Mart Stores Inc. and McDonald’s Corp., which draw budget-conscious consumers during hard times.

Forester also spent 2008 easing out of financial stocks with heavy exposure to the mortgage meltdown, and unloading energy holdings before skyrocketing oil prices reversed course.

While Forester used much of his fund’s cash holdings to snap up low-priced stocks in the third quarter, Ellison continues to keep plenty of money on the sidelines. About 40 percent of his $179 million fund’s assets are in cash, and Ellison said he doesn’t plan to use much of it until he sees signs that the slide in home prices and surge in job cuts are about to end.

The former bank teller has managed his small-banking specialty fund since its inception 12 years ago. While smaller banks generally weren’t as exposed to mortgage troubles as much as larger rivals, Ellison took pains to find the small banks with the least risk. Shares of his fund’s top holding, Paramus, N.J.-based Hudson City Bancorp., were up about 4 percent for the year.

Now, the key for both Ellison and Forester is figuring out when to adjust their strategies as markets eventually build momentum for an expected rebound.

Forester expects that to happen around mid-2009, when he hopes to move out of defensive stocks and into industrial and technology companies whose business tends to move in tandem with the economy.

Ellison is confident his small bank investment niche will continue to perform relatively well, but he doesn’t believe big profits are just around the corner for small banks. There are too many uncertainties in the economy, and currently low borrowing rates for everything from mortgages to auto loans will pressure all banks’ bottom lines. So for now, Ellison hopes to keep plenty of cash on the sidelines.

"I think unaffordable mortgages are still going to chew on the economy for a while," he said.

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It’s rare for Anheuser-Busch to sell one of its company-owned beer distributorships. It’s rarer still for the company to sell to an outsider, someone who is not already involved in carrying A-B’s beer.

But sell it will. The St. Louis-based unit of Belgian brewer Anheuser-Busch InBev will sell its Western Beverage Co., a huge wholesale operation based in Eugene, Ore., to Todd Epsten.

Epsten is the CEO of Major Brands Inc., a massive Missouri wine and liquor operation based near the Maplewood exit off Interstate 44.

Now, Epsten is forming a new company called Major Eagle Inc. to buy Western Beverage, which churns out an estimated 6 million to 7 million case equivalents per year and reportedly ranks among A-B’s top 25 distributorships.

Major Eagle will purchase A-B’s 56 percent stake in Western Beverage as well as the 44 percent stake held by other shareholders. The deal is expected to close by the end of the year. Financial terms were not disclosed.

Epsten said he was excited about the prospect of being "in the beer business in an even larger way, and being part of the A-B network no fax pay day loans."

Anheuser-Busch has traditionally liked to own a few distributorships to give the company a better sense of how things are going in the market.

In a statement, Tony Short, Anheuser-Busch’s vice president of business and wholesaler development, stressed that the transaction "was under consideration for several months prior to the close of the A-B InBev merger."

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Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) agreed to sell its 29 percent stake in Sanyo Electric (6764.T: Quote, Profile, Research, Stock Buzz) after Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) slightly sweetened its offer, three financial sources said, clearing the way for a deal worth at least $6.4 billion.

The move by Goldman, which, unlike two other major Sanyo shareholders, had rejected Panasonic’s earlier lower offers, came after the Wall Street firm reported its first quarterly loss since going public.

The combination of Panasonic, the world’s biggest plasma TV maker, and Sanyo, the top producer of rechargeable batteries, would create Japan’s No. 2 electronics manufacturer after Hitachi Ltd (6501.T: Quote, Profile, Research, Stock Buzz) with $120 billion in annual sales.

Sanyo shares closed down 1.4 percent at 141 yen on the news that a deal had been reached below the company’s current share price.

Panasonic and Sanyo plan to hold a news conference on Friday to give details of a planned tender offer, in which Panasonic will offer 131 yen per Sanyo share, the sources with direct knowledge of the matter said, 1 yen more than it had earlier offered this month.

Officials at Goldman Sachs and Panasonic declined to comment.

Goldman appears to have taken its chance to sell its stake, despite the price being far below what it had been seeking, due to the increasingly bleak outlook for Japanese consumer electronics makers.

Late last month, Panasonic, formerly known as Matsushita Electric, cut its annual net profit forecast by 90 percent and announced plans to restructure as the global financial crisis dampens sales of TVs and other electronics on line pay day loans.

Some analysts have also said the market price of Sanyo shares may not have fully factored in a dilution in per-share value, which comes with the conversion of preferred shares into common shares.

Sumitomo Mitsui Banking, Daiwa Securities SMBC and Goldman hold nearly 430 million of Sanyo’s preferred shares, each of which can be exchanged for 10 common shares when a restriction is lifted in March.

If converted, Goldman and Daiwa Securities SMBC would each hold a 29 percent stake in Sanyo, while Sumitomo Mitsui Banking would hold 12 percent. The combined 70 percent stake would be worth about $6.4 billion, based on the offer price of 131 yen.

CHALLENGES AHEAD

Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said Panasonic President Fumio Ohtsubo would have a tough time creating synergy effects even though the deal now looks set to go through.

“When things are good and top lines are growing, it is easy for Japanese companies to carry out restructuring. They are not very good at streamlining in an environment like this since no one would rehire the employees they let go,” he said.

“His pain from overseeing the birth of a successful merger has just begun.” 

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Welder Robert England has been out of work since his former employer Dana Canada shut its plant in St. Mary’s last summer.

"Everyone says: `Go West.’ These days anything is worth a try," said the 34-year-old father of two, who welded Ford-150 frames at the plant near London for the past seven years.

Armed with a stack of resumés and high hopes, he and wife Melanie visited the Workwest career caravan in Mississauga yesterday with their 4-year-old son and daughter, 2, in tow, looking for work in Alberta’s oil patch.

Ontario’s manufacturing sector has been getting hammered lately thanks to the ailing auto industry, the weakening economy and a stronger loonie that’s only recently slid back – just not in time for those like England.

A dozen Western Canadian employers at the job fair are chomping at the bit to recruit Ontarians struggling in a tighter job market and eager to sign on as civic planners, labourers, firefighters, transit drivers, electricians, sandblasters, health-care professionals – you name it.

"One of the oil field companies told us the jobs pay $50 an hour. It’s hard work, but that makes it worth moving a family of four out there," said England.

Hundreds of others of various ages and training toured the booths yesterday to see what the West and its storied economic boom have to offer them.

Workwest, the Calgary-based company running career fairs for the past two years in Ontario, said despite the recent doom and gloom on world markets, most of B.C., Alberta, Saskatchewan and Manitoba continue to thrive, and have yet to feel the fallout Ontario has same day cash advances.

"We burned out our labour pool a long time ago. Even with oil at $64 a barrel instead of $150, these companies are still doing well and projects need to be built," said Workwest president Ray Edwardson.

Gary Griffin and his father Brad drove in from their Haliburton home and found it was worth the three-hour trip. They were thrilled to hear a recruiter for the City of Calgary Fire Department say they’re looking for 200 new firefighters next year and another 200 the year after.

"It’s difficult to get a job here. They had 800 applicants for the Barrie fire department when I applied," said Gary, 19, who recently graduated from Georgian College’s firefighter program and would love to move to Calgary.

"A young guy like me, I’ve got nothing to lose moving out west," agreed Brandon Chaston, 24, who has struggled to find work in Hamilton after getting a degree in environmental sciences.

Windsor resident Ranjan Subramaniam told exhibitors he’s looking for a job in information technology, noting his area has been hard-hit by job losses.

"I lost a job in January because of the U.S. housing crisis," said the 26-year-old, who worked in the banking industry in IT. "I don’t mind going where the jobs are."

The job fair continues today from 9 a.m. to 6 p.m. at the International Centre at 6900 Airport Rd. For information about employment opportunities go to Workwest.ca.

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The number of Americans filing new claims for unemployment insurance did not change from last week, remaining at an elevated level that indicates weakness in the nation’s economy.

The U.S. Department of Labor reported Thursday that initial filings for state jobless benefits rested at a seasonally adjusted 479,000 for the week ended Oct. 25.

Economists surveyed by Briefing.com expected the number to fall to 473,000 from the initially reported 478,000. Last year, there were 332,000 Americans filing new unemployment claims.

The Labor Department reported that there were 7,400 unemployment claims related to the effects of Hurricane Ike in Texas, down from the 12,000 such claims last week.

Ian Shepherdson, economist at High Frequency Economics, had hoped the fading of the impact of Ike would allow unemployment claims to fall.

Shepherdson said the fact that claims held steady shows a labor market in decline.

"There can be no question that the labor market is deteriorating; the only issue is the speed of the decline and the eventual peak in unemployment," he wrote in a note creditreports.

He said the national unemployment rate could reach 8.5%. It currently stands at 6.1%.

The four-week average of jobless claims, which smoothes out fluctuations fell to 475,500 from the week before. Last year, the average stood at 329,750.

A level of more than 400,000 was present throughout the last two recessions.

The number of American workers continuing to collect benefits for more than one week decreased by 12,000 to 3,715,000 for the week ended Oct. 18, the most recent data available. A year ago, there were 2,598,000 Americans continuing to collect benefits.

Four weeks prior, unemployment claims spiked to 499,000, the highest level recorded since the 517,000 claims filed in the wake of the Sept. 11 terrorist attacks.

Earlier this month, Labor Department reported net payroll nationwide declined by 159,000 in September, the ninth straight month the economy lost jobs.  

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Mutual fund company AIC Ltd., buffeted by the worldwide financial crisis, has trimmed its workforce by 20 per cent to keep costs down and better position itself in a tough economic environment.

The privately owned company, which has suffered a large number of redemptions since the market meltdown began, laid off 53 out of some 290 employees on Thursday, spokesperson Terri Oswald said.

"The areas that were affected were mostly marketing and information technology," said Oswald, adding that some employees on the investment side and in sales were also let go.

There were no layoffs of fund managers, but three analysts were cut.

"The key reason for the reduction is simply that the market conditions are so difficult right now," she said.

The company doesn’t see any more financial problems down the road and no more pink slips are contemplated, Oswald added.

"We’re trying to keep our cost structure so that we can continue to remain profitable through this storm that every other company is experiencing internet pay day loans."

AIC, which is controlled by billionaire Michael Lee-Chin, has been suffering from net redemptions for several years. Some of its stock portfolios were hit hard because of holdings in the battered financial sector.

Canadian investors redeemed a record $4.5 billion in mutual funds last month, making September the worst month for outflows since the Investment Funds Institute of Canada started collecting data in 1990.

AIC, Canada’s 19th largest fund company, saw net outflows of $86 million in September.

The downturn is expected to spur consolidation but AIC has said it is not up for sale.

The Canadian Press

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Time and possibilities are a jumble in the 2008 investment world, but looking ahead rather than behind is what investing is all about.

Experts agree that fundamental changes under way in our financial system will provide a different scenario for tending to our money in the year 2020.

The united resolve of International Monetary Fund nations to "use all available tools" to prevent major financial institution failures indicates the global nature of that scenario.

A lot will depend on financial institutions, on government and on us. Either we learn from what went wrong and revise our credit and saving habits, or we’re doomed to repeat mistakes.
Some believe the current shakedown bodes well for the future.

"Investing will have changed significantly for the better by 2020," said Bruce Bittles, chief investment strategist for Milwaukee-based Robert W. Baird Inc. "We’re in the position we are today because the country over several decades had become a nation of consumers, not savers, who had been borrowing to buy foreign goods."

A dozen years from now, U.S. consumers will have returned to a more traditional savings ethic and will save 8 percent of their income, which was the savings rate until it began eroding in the 1990s, Bittles said. And don’t worry too much about a slow economy, he added.

"A protracted slow economy doesn’t mean the stock market can’t do well, because the market typically does well in a slow-growth economy," Bittles said. "It will be very bullish long-term if we move back into a savings ethic in which we fund our own liabilities and loans."

The investor mind-set must be patience because it will take a while to get through current woes, said Chris Brown, chief investment strategist for Pax World Management Corp. in Portsmouth, N.H. Companies that survive as winners will be stronger and face less competition.

He noted that Warren Buffett of Berkshire Hathaway is obviously excited about possibilities because he invested in Goldman Sachs and General Electric Co. as seemingly once-in-a-lifetime opportunities.

"We’re going to see people saving more for retirement, but they’ll also be working longer because they hadn’t saved enough early on," Brown said. "By 2020, there will be a huge shift in spending habits in which saving, not spending, is rewarded and you’ll no longer be punished for saving by low interest rates."

We must remember not to have short memories.

"I would assume that people and investment firms in 2020 will remember the dangers of leverage," said E. William Stone, chief investment strategist with PNC Wealth Management in Philadelphia electronic check payday advance. "We may have a better appreciation for seemingly hidden risk or the risk of chasing excess returns."

Because investment returns will revive at various times throughout the 2010 decade, there’s a chance this could energize investors to chase returns once again, Stone said. The lessons of today may have been forgotten and greed will take over again.

The undeniable staying power of greed has other experts worried.

"By 2020, peoples’ tolerance for risk will return," said Lawrence Harris, professor of finance and business economics at USC’s Marshall School of Business.

Yet in 2020 you’ll find positive differences, such as the greater importance of alternative energy. That means plenty of windmills in the Midwest and in the oceans, but oil prices "going through the roof," Harris predicted. There will be long-term upward pressure on commodities due to growth in the world population and rising education levels that make people more prosperous, he said.

Experts hope it will become easier to invest in understandable instruments in 2020. Many of today’s problems were masked in complex financial vehicles with obscure descriptions. Subprime was only widely understood when it was too late.

"You may see a movement toward simplicity on the part of investors in which complex products are shunned, but that will take a while," Stone said. "A lot of complex financial products currently aren’t traded on exchanges, so we may also see a push to have more of them on exchanges where they can be monitored closely."

Global markets will loom large in 2020.

The U.S., Europe, China and India should remain locked in "very, very slow" economic growth for a long period of time, predicted Bittles. Yet even though China, India and Latin America may falter the next couple of years, Harris considers it inevitable their economies will grow.

There likely will be one global system with united goals, as foreshadowed recently by the IMF, rather than 200 independent economies, Brown said. The U.S. will be the biggest driver, but by 2020 a number of emerging economies also will have clout.

For now, expect the rising U.S. dollar and falling foreign securities to continue to give American investors a double dose of financial pain, Bittles said.

andrewinv@aol.com

2008, TRIBUNE MEDIA SERVICES INC.

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Shares in Swiss bank UBS AG took a new tumble on Monday, falling further than a hard-hit banking sector after reports it will have to write down another $5 billion on its risky investments in the second half of the year.

News that lack of liquidity had forced U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) to file for bankruptcy protection dragged down financial sector stocks worldwide.

Without quoting sources, Swiss paper Sonntags Zeitung said UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), Europe’s hardest hit bank in the financial market turmoil, would have to write down another $5 billion on its risky investments in the second half.

The paper said it expected UBS to update the market before an October 2 shareholder meeting. UBS declined to comment.

“The bad news is that the banking crisis is not over and that there are still lots of bad credits around,” Claude Zehnder, head of research for technical trading at Zuercher Kantonalbank, said.

“Also, the possibility has arisen this weekend of further writedowns,” he added.

UBS announced last month writedowns had climbed a further $5 billion in the second quarter to top $42 billion, and said it was splitting the investment bank that had dragged it into the red from its core wealth management business.

UBS shares were down 10.1 percent at 21.14 Swiss francs at 0815 GMT, underperforming the DJ Stoxx European banks index , which was down 5.8 percent http://fcrwizard.com. UBS shares had rallied recently after losing two-thirds of their value in the last year. 

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Gasoline prices rose for the first time in 10 days as Hurricane Ike bears down on the Texas coast, according to a nationwide survey of gas station credit card swipes.

The average price of regular unleaded gasoline rose 1.6 cents to $3.668 a gallon from $3.652 a day earlier, motorist group AAA said Wednesday. The last time gas prices rose was Aug. 31 as Hurricane Gustav forced workers to abandon offshore oil rigs ahead of that storm.

Forecasters are currently predicting Ike will hit Texas late Friday or early Saturday as a major Category 3 hurricane but the storm remains unpredictable.

Gas prices jumped 1.7 cents to $3.532 a gallon in Texas. Prices also popped higher in Alabama, Mississippi, Georgia, Louisiana, Florida and the Carolinas. Nationwide, Alaska and Hawaii remained the two states with gas prices still tracking above $4 a gallon.

The cheapest gas continues to be found in New Jersey, where prices averaged $3.421 a gallon payday advance lender. Crude prices have trended lower amid heightened concern about weakening demand and in reaction to the slew of storms and hurricanes.

Oil prices continue to hover around their lowest level in five months. On Tuesday, crude futures for October delivery tumbled more than $3 a barrel to $103.26 — their lowest close since April 1.

Early Wednesday, prices were little changed at $103.30 as nervous investors awaited the government’s latest reading on oil and gas supplies and following OPEC’s announced production cuts.

Meanwhile, gas remains about 11%, or 44 cents, below the record high average of $4.114 that AAA reported on July 17, but they are still 85 cents above this time last year. 

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With its unprecedented takeover of Fannie Mae and Freddie Mac this week, the U.S. government may have also bailed out Asia’s markets by staunching a heavy flow of equity capital out of the region.

This is significant. Fund managers had been moving money out of the region and Asia Inc had been slowing down its overseas borrowings in what amounted to early signs of the first capital outflow since the Asian financial crisis a decade ago.

Now, in one fell swoop, Washington has taken over half of all U.S. mortgages, so removing one of the big question marks in investors’ minds that for the last six months had made them flee Asia’s high growth, yet high risk, stock markets.

Of course, the financial crisis is not over as a slump in Lehman Brothers’ shares has shown.

But Fannie and Freddie hold outstanding debt of $5 trillion, of which about 20 to 22 percent is held by countries like Japan, China, Russia, and South Korea electronic check payday advance. So having the risk on that debt effectively cut to zero greatly eliminates the chance of a wave of global losses on the companies’ bonds.

“This is a watershed in the market because it reduces risk aversion. Risk has been transferred from the private to the public sector,” said Dariusz Kowalczyk, chief investment strategist with CFC Seymour Ltd in Hong Kong.

Since mid May, the MSCI Asia-Pacific ex-Japan stocks index .MIAPJ0000PUS has fallen 26 percent to its lowest level in almost two years.

The money can start to flow back in to Asia, Kowalczyk says. He expects an upward trend for the rest of the year as fund managers reduce the cash element of their portfolios and fill up on equities. 

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