May 14 (Bloomberg) -- After 45 years of running the same mutual fund, Albert Nicholas is finally getting the hang of it.

Nicholas, 83, who has weathered downturns from the 1970s bear market to the dot-com bust in the early 2000s, picked enough winners in his $2.7 billion Nicholas Fund to produce the best risk-adjusted results among large-company growth funds over the past three years. The fund combined the highest total return and below-average volatility in a group of 82 comparable funds with at least $1 billion in assets, according to the BLOOMBERG RISKLESS RETURN RANKING.

Nicholas employs an investment philosophy that he developed four decades ago after a reliance on stocks of fast-growing companies crushed the fund when the U.S. stock market lost almost half of its value in a 21-month period from 1973 to 1974.

His approach includes an emphasis on risk management and paying reasonable prices for companies that can hold up in market downturns.

“We are still looking for growth, but our first rule is: try to avoid losing money,” Nicholas said in a telephone interview from Milwaukee.

David Fuller's view

Here is the Bloomberg article which I commend to subscribers.

One of the first and costly lessons that Nicholas learned was that rapidly growing companies did very well in rising markets, but were extremely vulnerable during significant corrections, let alone bear markets. 

Today, with stock markets which have experienced significant bull market moves, such as the USA, and are therefore somewhat more expensive than others, I would continue to be wary of buying shares that have been outperforming and are well above their rising 200-day moving averages.  Instead, I would prefer cyclical laggards with good yields, especially when they begin to show some relative strength.