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June 3, 2008, 11:58 a.m. EDT

Don't hold too much of the energy sector

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By MarketWatch

BOSTON (MarketWatch) -- Money manager Steve Goldberg says that investors have enough exposure to energy and oil stocks in their ordinary mutual funds that they need to avoid energy sector funds, worrying about how any type of oil bubble will hit their portfolio if they continue gorging on energy.

In a radio interview with Chuck Jaffe, MarketWatch senior columnist, Goldberg -- a former Kiplinger's personal finance editor -- said he believes the long-term price of oil is going up, and that many large-cap-growth managers feel the same way; when an investor adds an energy fund to the mix, the resulting overlap leaves too large a chunk of assets in the sector, which makes the portfolio vulnerable to any downturn.

Goldberg said that he would sell Excelsior Energy & Natural Resources , more because of his feelings about how sector funds fit a portfolio than for the fund itself, and said that line of thinking would apply to virtually any energy fund on the market. He noted that he recently sold T. Rowe Price New Era /zigman2/quotes/205935849/realtime PRNEX +0.24% .

Goldberg noted that he prefers managers with long-term track records of 10 years or more, which is one reason why he is giving Bill Miller the benefit of the doubt and calling Legg Mason Value Trust /zigman2/quotes/203623666/realtime LMVTX +0.50% a hold. Miller, who had a 15-year streak of beating the Standard & Poor's 500, has been a dismal performer of late, but Goldberg said it was too early to throw in the towel on him due to a bad year or two.

He put a buy on Ken Heebner's CGM Focus fund /zigman2/quotes/203752257/realtime CGMFX +0.61% -- noting that investors need to be careful that they can stomach the volatility -- as well as Vanguard Total Stock Market /zigman2/quotes/210096929/realtime VGTSX -0.05% , Wintergreen and Champlain Small Company /zigman2/quotes/200762617/realtime CIPSX -0.59% . He recommended selling Parnassus Small Cap PARSX 0.00% .

Goldberg also put a hold on the Sequoia Fund /zigman2/quotes/209100218/realtime SEQUX -0.34% , saying investors had not had much chance to look at the fund since it recently reopened and noting for that reason that he prefers the Fairholme fund /zigman2/quotes/200889155/realtime FAIRX -1.58% , which takes a similar strategy.

In another interview, Ken Shreve, markets desk anchor for Investor's Business Daily, said that investors panning the market are having a tough time coming up with any worthwhile nuggets, a sign that the market move that began in mid-March has left too many issues extended in price.

IBD's market outlook turned from positive to negative in late May, and Shreve said the small number of stocks able to pass screens is a sign that investors should "listen to the market's message." Shreve highlighted three stocks that are still able to come through the screening process looking good now, but cautioned that they're not at buying points yet.

He said that the "surging relative strength lines" screen highlights Amphenol /zigman2/quotes/207999687/composite APH -0.31% , which he described as "setting up a good base, with a potential buy point of $48.34), noted that a screen of the IBD 100 list brought up Apple /zigman2/quotes/202934861/composite AAPL +0.51% , which is also setting up a base -- with a potential buy at $192.34 -- and that the screen of recent initial public offerings suggested that Visa /zigman2/quotes/203660239/composite V -0.15% is setting up a good base that is not complete yet.

Listen to the highlights of Your Money with Chuck Jaffe.

Jaffe's radio show regularly features expert reviews of stocks and mutual funds suggested by MarketWatch readers; to request a stock or mutual fund for review, send your name, hometown and the ticker symbols that interest you to cjaffe@marketwatch.com .

/zigman2/quotes/205935849/realtime
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$ 100.58
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$ 44.75
+0.27 +0.61%
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$ 20.60
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$ 179.40
-0.62 -0.34%
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$ 30.58
-0.49 -1.58%
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/zigman2/quotes/207999687/composite
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$ 81.61
-0.25 -0.31%
Volume: 0.00
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P/E Ratio
34.35
Dividend Yield
0.98%
Market Cap
$48.81 billion
Rev. per Employee
$128,444
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/zigman2/quotes/202934861/composite
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$ 173.07
+0.88 +0.51%
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P/E Ratio
30.87
Dividend Yield
0.51%
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$2826.99 billion
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$2.38M
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$ 214.67
-0.33 -0.15%
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P/E Ratio
39.11
Dividend Yield
0.70%
Market Cap
$452.15 billion
Rev. per Employee
$1.12M
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