Dear friends,

As a break from the gloom-and-doom-mongering that has overwhelmed investors of late, I thought I'd share a simple reminder: Long-term investors have a lot more to be happy about than they currently realize. I’m neither ignoring nor sugar-coating the blood-letting that began a year ago and accelerated madly in the last month. As someone who tends to invest rather more boldly than most, I suspect that my portfolio has lost a fair chunk more than most.

All of which leads to me share 104 things to be happy about.

Reasons to be happy: Part I: There are 34 investment choices that you didn’t have one year ago

As the bear market grinds on and investors decide that the guarantee of "selling low" is better than the possibility of "selling lower" (or, God forbid, holding on), dozens of outstanding funds have re-opened their doors to new investors. Every fund on the list below re-opened in 2008. While not every one is a great option (Magellan, for example), a bunch of them are quite likely better than anything you own now.

Reasons to be happy, Part II: Virtually every great closed fund now has a plausible substitute.

Reasons 35 – 42 are the promising clones or siblings to some of the five-star retail funds that remain closed. A number of fund families have tried to balance the interests of current and prospective shareholders by closing extant funds when their investing strategies reach their limits, but deploying the same management teams to new, nimbler sibling funds.

Reasons to be happy, Part III: First-rate firms are offering dozens of new, first-rate funds

Reasons 43 – 63 are simple reasons: New target date choices for investors who’d like to leave the driving to somebody else. Each of these fund families has launched at least four new target date funds in the past year:

For folks who want to make their own decisions, Reasons 64 – 101 are funds that have launched during 2008. Out of all the new-fund launches, I’ve highlighted the following because they offer some combination of great management teams, access to institutional investment managers, innovative strategies and/or reasonable expenses:

Reasons to be happy, Part IV: Jeremy Grantham is happy

Reason 102 is that Jeremy Grantham is happy, so you should be, too. For folks who don’t know Mr. Grantham, he’s one of the co-founders and aforementioned wise man of GMO, a large institutional investment operation that specializes in rigorous quantitative modeling. Mr. Grantham has been warning investors for years -– at least since the late 1990s -– that we were facing a financial storm of unimaginable proportions. He argued that the tech meltdown in the early part of this century was a partial palliative, but that the broad market had never corrected sufficiently to re-establish the attractiveness of investing in U.S. stocks.

Until now. On October 10^th, Mr. Grantham offered the following observations in his quarterly letter to investors:

In a Morningstar interview, Grantham concluded that stocks hadn’t been this cheap since 1987. Investors Business Daily (10/23) described Grantham’s missive as "the most startling about-face of a bearish value manager."

IBD also noted that, one day before Grantham’s letter, the legendary "Robert Rodriguez . . . on Oct. 9 did something he hadn't done in an entire year. He bought some stocks" (Norm Alster, "Sharply Lower Stock Prices Turn Some Longtime Bears To Buyers," IBD, 10/23/2008). One day after Grantham’s letter, The New York Times quoted Marty Whitman as predicting "This is the opportunity of a lifetime. The most important securities are being given away" (Alex Berenson, "Those With a Sense of History May Find It’s Time to Invest," 10/16/2008).

Reasons to be happy, Part V: Rekenthaler speaks!

Reason 103 is the return of one of the investing world’s two great curmudgeons. (The other, Roy Weitz, remains on the scene to publish FundAlarm, moderate its discussion board and share the occasional bon mot with inquiring journalists.)

What, you might ask, is a curmudgeon? A venerable word (attested in the 1560s) of unknown origin. Taken literally, it’s that old guy on the porch who growls and shakes his cane at passing whippersnappers. That’s reflected in the most common definition of the world ("a crusty irascible cantankerous old person full of stubborn ideas") but Jon Winokur, editor of The Portable Curmudgeon (1992) sets the record straight:

John Rekenthaler howled from atop The Rekenthaler Report, weekly, at Morningstar before being lured into the bowels of the beast by the promise of unlimited power and adulation as president of Morningstar Associates and now vice president of research and new product development. Late in October, The Rekenthaler Report returned to Morningstar.com.

A taste of vintage Rekenthaler:

And the re-emergent Rekenthaler:

By happy coincidence, Roy and John reside 1740 miles apart in Los Angeles and Chicago, respectively. The Rocky Mountains serve as a convenient safety buffer and territorial marker separating the Twin Titans. There was only one reported encounter between the two. It occurred in the late 90s, when a regrettable number of folks –- Roy and John not included -– thought that "diversifying my portfolio" meant buying shares of all ten Janus funds. Smelling a rat, John hopped on a plane and visited the management team at the Janus headquarters:

John is on the right

John is on the left

Reasons to be happy, Part VI: The double-secret-reverse-end-around worked!

Reason 104: I spent Sunday afternoon watching the mighty flag football "Balcons" defend their 4-0 record against visiting Calamus-Wheatland. (I tried suggesting to my son that perhaps his team’s name was actually "Falcons," but with all the certainty of an eight-year-old he denounced the very thought.) The Balcons, standing tall in the Davenport Dad’s Club third- and fourth-grade division, took the field on a surprisingly wintry day.

An admirable collection of boys and girls fought for 45 minutes in conditions that would have convinced the Packers and Bears to stay home. Forty degree temperatures and a steady 40 mph wind sent trash cans, corn stalks and the occasional wingback tumbling across the field. In the end, the Balcons prevailed (32-0, though no one keeps score) over the stout-hearted but out-gunned warriors from Wheatland.

Truth be told, even in the absence of the other 103, an afternoon with my son and the lovely home-cooked dinner with friends afterward makes me feel blessed beyond the ability of markets to mar or money to improve. Please insert your own Reason 104 here (surely you have one), and treasure it.

Briefly noted:

Janus announced that 9% of its workers – though none of its portfolio managers or analysts – are losing their jobs. That’s bad, though a mere shadow of the recent estimate of 200,000 job cuts on Wall Street. If borne out, that would represent almost 25% of the Street’s workforce (AP, "Wall Street layoffs could surge past 200,000," 10/23/2008).

In another blow to the "it’s not a stock market, it’s a market of stocks" crowd, 80% of Vanguard’s 50 index funds and ETFs are leading their peers so far in 2008 (through 10/24). An astounding 97% of Vanguard’s index funds have above-average returns over the past five years.

The month’s best headline comes from MutualFundWire.com: "Eight Fido Dwarf-Tossers Reach a Settlement with the SEC" (10/8/2008). The (mostly former) Fidelity employees got in trouble for accepting improper gifts somehow tied to "a lavish bachelor party, with included dwarf-tossing, held in Miami for one of the accused."

McCain wins! McCain wins! McCain wins! Sort of. At the very least, in the great battle of Red versus Blue mutual funds, McCain’s entry can hold aloft a proud banner reading “We’re not dead yet!” I’ve reported before on the presence of competing fund families: one Red (represented by the Free Enterprise Action fund, FEAOX) and one Blue (represented by the Blue Fund, BLUFX) which between them represented “equal opportunity idiocy.” The Free Enterprise Fund bought shares of companies for the purpose of going to shareholder meetings and ranting about socialism. The Blue Funds bought shares of companies that “think blue and act blue.” The question was “which is more idiotic?” And now the verdict is in: the Red fund, with few assets and high expenses, has survived the collapse of both of its Blue counterparts. By virtue of having lost only a third of its value, it is also posting strong relative performances both year-to-date and over the past 12 months.

Fidelity launches four more funds that you can’t have: Fido announced the creation of four new "Central" funds, which can be invested-in only by other Fidelity funds. The most intriguing of the four, All–Sector Equity Fund, is a fund of Fidelity’s sector funds.

Effective at the end of this year, Fidelity Japan Smaller Companies (FJSCX) will lose long-term manager Kenichi Mizushita. The fund returned 240% in 1999 and assets increased fifteen-fold. It promptly lost 50% in 2000 and saw an 80% decline in assets under management. Mizushita had a long run of strong performances followed by several years badly disappointing years. He is being succeeded by Nick Price, who runs the European version of the Emerging Europe, Middle East and Africa fund.

Historically September and October are the two worst months for the U.S. stock market. I’m keeping that as a good thought for the weeks and months ahead.

If you’ve got a thought – happy or otherwise – to share, you can either post a note on FundAlarm’s vibrant discussion group and drop us a line through Roy’s feedback link.

Take care. I’ll be back just after Thanksgiving, with hopes that we all have lots more to be thankful about.

David