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Before you drive into auto stocks...

By Guy HalversonStaff writer of The Christian Science Monitor / March 22, 1999


To get the smoothest possible ride out of your auto-linked investments in 1999, financial pros suggest the following tips:

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1. If buying an auto-related mutual fund, look for a diversified fund, that is, a fund that carries a portfolio of both manufacturers and auto supply/tire companies.

2. For both funds and individual stocks, look for automakers with strong global sales that could take advantage of market upswings abroad, especially in Japan and Asia.

3. "Trying to time the market almost never works," says Justin Craib-Cox, of Morningstar Inc. So, buy auto stocks or auto-related funds for the long haul, not just to take advantage of expected cyclical gains or possible mergers.

4. Ask yourself: "Do I really need a sector fund, such as a fund heavy with auto companies?" You can usually buy into most major automakers by investing in a S&P 500 index fund, or a total stock-market index fund.

5. Be wary if auto sales jump because of a sudden new rebate program. The rebates may be eroding company net profits.