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With respect to considering this year's investment strategy, I feel like I'm in one of those submarine movies where the speakers are crackling, "Dive. ... Dive!"

A good part of the holiday was spent wringing my hands and thanking my lucky stars that I have the discipline to limit myself to this exercise just once a year.

It would be hard for anyone not to be pleased with stock market results from the past five years. The S&P 500 index has gained an average of almost 12 percent per year during that time, and this means that $1,000 at the darkest hour of the downturn (March of 2003) would have more than tripled by now.

My practice of spreading assets across a variety of investment types and styles and then rebalancing once a year actually generated annual returns approaching 16 percent.

My big winners were the real estate funds and small company funds that I had purchased when they were down and forgotten in the late 90s -- plus a share of Berkshire Hathaway back in bubble days when Warren was ridiculed for "not getting it."

Then, about five years ago, Laurence Lindsay was fired as an economic adviser for being so bold as to suggest that the Iraq war might cost as much as $30 billion. About that time, I found that investing in foreign stock funds lifted my spirits. Dodge and Cox International and T. Rowe Price Emerging markets certainly have helped to beat market averages, while some energy and precious metals funds struck me as making sense in the absence of any energy policy.

Meanwhile, I'm suddenly 63 and not getting any younger. Market prognosticators seem equally divided between those like Bob Brinker who see a possible 15 percent upside in 2008 and a number of others who foresee a 15 percent downside.

Current econometrics as expressed in an October speech by Vanguard founder John Bogle suggested an average of just 7 percent per year for the next 10 years.

For my part, I have decided to switch my investment objective from "Aggressive" to "Moderate." In response, my cyberspace advisers at Advisor Software in Lafayette are urging me to move more assets toward bonds, foreign investments and large value-oriented stocks.

No more REIT's or small company funds, but I was selling them off anyway in a rebalancing effort as they rose in value over the past five years. At the same time, the recommendation is to move about a third of my assets into bonds -- with 10 percent in government-backed issues.

I notice that the conservative end of the high-yield bond spectrum (Vanguard's high yield Corporate) is paying an 8 percent yield right now. I can live with that as I ride off into the setting sun. Also, one-third of a portfolio in bonds cushions the downside without penalizing the upside to any great degree.

A highly diversified portfolio left alone can leave at least some evidence allowing any investor to feel like a genius. When my Softbank stock's value quintupled and then dropped from its high of $165,000 down to $3,000, at least I still had my REIT's and small caps chugging along. It's like Bogart in "Casablanca," who says, "We'll always have Paris."

We need to disabuse ourselves of any thought that we can pick winning mutual funds based on past performance.

Mark Hulbert in the New York Times cited a definitive work by Mark Carhart published in the Journal of Finance (March of 1997.) I've read most of these studies, and they all arrive at the same conclusion: A fund that beats its peer group usually accomplishes this by having low fees and low turnover.

A fund type (an entire peer group) that has been a winner will persist for only a relatively short period of time before passing the baton to another fund type as the economic cycle turns. So, forget about trying to second-guess next year's winner.

Spread assets across a variety of fund types. Lean toward some bond and large-cap value funds if reducing risk is of interest. Then, grip the arms of your chair as firmly as you can and sit there until January of 2009.

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