If You Own a Mutual Fund

That goes up more than 100% in one year, you probably should sell it.

Abnormal out sized gains feel great when you are on the receiving end. The risks one needs to take to get there are significant.

The Wall Street Journal today is reporting the Garrett Van Wagoner, skipper of the Van Wagoner Emerging Growth Fund is hitting the showers. The fund gained nearly 300% in 1999. Even including that year, the fund has lost 10% per year over the last decade.

Van Wagoner narrowly focused, as the name if the fund implies, on emerging growth stock - small, rapidly growing companies, many of them in the technology space. That is a very tough sport. When the market turns against these types of names, the selling can be devastating. Valuations tend to get so stretched on the way up that there is almost no suport on the way down.

I have a buddy we call Dirt who was a Chief Financial Officer type at smallish firms for years. He once told me that he wouuld never work for a pubicly traded company. Probably for lots of reasons but the strain of making estimates quarter after quarter is a big deal.