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Roy's Mutual Fund Portfolio
as of December 31, 2000
And a few comments below...

Fund	% of total
Vanguard Health Care	20%
Weitz Partners Value	16%
Vanguard 500 Index	14%
T. Rowe Price Science & Technology	12%
Vanguard European Stock Idx	12%
Cohen & Steers Realty Shares	11%
Invesco European	7%
FBR Financial Services	6%
RS Internet Age	2%
	_____
Total	100%

Some comments:

• I've opted to hold a relatively diverse portfolio, and that decision looked pretty smart in 2000, after looking pretty dumb in 1999:
  
  

  Fund*	1999 Return (%)	2000 Return (%)
  Vanguard Health Care	7.04	60.56
  Vanguard 500 Index	21.07	-9.06
  T. Rowe Price Science & Technology	100.99	-34.19
  Vanguard European Stock Index	16.66	-8.21
  Cohen & Steers Realty Shares	2.69	26.63
  FBR Financial Services	-16.55	47.19

  * Only includes funds that were were held for all of 1999 and 2000
  
  
• Now, as I write this on January 28, 2001, it looks like the pendulum might be getting ready to swing the other way:
  
  

  Fund*	1999 Return (%)	2000 Return (%)	2001 Return (%) (Thru 1/28/00)
  Vanguard Health Care	7.04	60.56	-6.7
  Vanguard 500 Index	21.07	-9.06	2.7
  T. Rowe Price Science & Technology	100.99	-34.19	11.4
  Vanguard European Stock Index	16.66	-8.21	-1.2
  Cohen & Steers Realty Shares	2.69	26.63	-0.6
  FBR Financial Services	-16.55	47.19	-2.31

  * Only includes funds that were were held for all of 1999 and 2000
  
  
• As far as I'm concerned, these short-term fluctuations are completely, totally, and utterly irrelevent (I hope I've said that strongly enough). I'm satisfied with my overall asset and sector allocation, and I think it's probably good for many years to come. If I do make changes, it's likely to be in specific funds, with the cash from any liquidations put back into the same sector it came from.
  
  
• I try to allocate new money to each fund evenly but, in practice, this is difficult to do. That's because the dollar amounts of each investment are rarely the same, especially in my non-retirement accounts. In general, I make my first investment of the year in the fund that is performing worst at the time. I make my next investment in the next fund that is performing worst at that time, and so on.
  
  
• EDITORIAL: I can't imagine how anyone can invest in mutual funds these days, and stay sane, without some kind of overall asset allocation. Without an asset allocation as a guide, you're like a cork on the ocean, a dinghy in a hurricane, a small fishing boat in the perfect storm, a writer blown around by too many trite similes.
  
  
• Last year, Mr. Spock and Mr. Slug battled it out over whether I should sell my interest in Longleaf Partners fund. I did sell, on July 24, and I reinvested the proceeds in the Weitz (no relation) Partners Value fund. From the date I sold Longleaf, through December 31, 2000, Longleaf returned 14.19%. The Weitz fund returned 15.62% over the same period so, over a very short period of time, I look somewhat smart. So far this year, Longleaf is up 3.0%, while Weitz Partners Value is up 1.8%. Like I said, if you pay attention to short-term fluctuations, you'll go crazy. I've had no second thoughts about selling Longleaf -- I made the best decision I could with the information I had at the time, which is all any investor can do. I'm committed to the Weitz fund for the foreseeable future and, if I look back at Longleaf, it will be with interest rather than regret.
  
  
• OK, the dumb moves. Early in February 2000, I sold off a piece of T. Rowe Price Science & Technology, and invested the proceeds in RS Internet Age. I also sold my entire interest in T. Rowe Price European Stock, and invested the proceeds in Invesco European. Both moves were intended to goose my portfolio with a bit more technology. I recognized that I might be buying at the very top of the market and, as it turned out, I was almost exactly right. But I also bought with the intention of holding these new funds, even if the market tanked. It did, and I have.
  
  
• My investments in individual stocks are relatively small. I still own shares of Franklin Resources and T.Rowe Price Associates, the parent companies of their respective mutual funds. I recently bought shares of TheStreet.com. I think I know something about online financial sites and, for all its problems, I believe the TheStreet.com will hit $4 per share within the next 12 to 18 months. It has recently been trading about $2.75, so that would represent a gain of about 45%. I'll take it.
  
  
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