If you're wondering what the heck is going on in the investment world, you're not alone. Many people are confused and uncertain, which is why the stock markets are so volatile. In normal times, we simply don't expect a triple-digit loss on the Dow one day followed by a triple-digit gain the next. But these times are anything but normal. Just think about what we've been through in the past couple of years:

• A massive collapse of the high-tech sector, beyond anything we thought possible.
• A two-year bear market that's not over yet. September 11.
• The collapse of Enron, which has shaken the financial world.
• The subsequent accounting scandal that has virtually ruined Arthur Andersen and raised widespread questions about the accuracy of financial reporting.
• The emerging Wall Street scandal involving analysts at top brokerage firms who are accused of publicly touted stocks in which their company had a vested interest, while privately ridiculing them.

It's no wonder that people are overreacting. Bad news can cause a stock to lose 25% of its value in a day. A little good news can have the opposite effect.

Crazy? You bet it is. So how can you protect yourself, short of hiding all your money under the mattress? Here are my suggestions:

• Make a plan and stick to it. Put an investment program in place that will stand up over the long term and stay with it. Over time, it will pay off. If you need help in putting together such a plan, see my new book Secrets of Successful Investing.
• Stay abreast of the news but don't overreact to it. Sure, it's important to know what is going on. But don't base major investment decisions on this morning's headlines.
• Diversify. If you set up an investment portfolio with a good mix of cash, income and equity securities, you'll reduce your risk and sleep better at night.
• Invest only in quality and value. Don't speculate. Avoid leveraging unless you're a pro. Borrowing to invest increases risk disproportionately.
• Be realistic. If you can generate an average annual return of 8% from a diversified portfolio over time - which is very possible - you will end up with a great nest egg and keep your sanity as well.

Despite the turbulence in the markets, some stocks are performing very well. Some of the best results are coming from smaller companies with good balance sheets, strong earnings potential, and reasonable prices. One example is a U.S. company called Building Materials Holding Corporation (NAS: BMHC) which was recommended in both our Internet Wealth Builder and TOP STOCKS newsletters by contributing editor Irwin Michael a couple of months ago when it was trading in the US$13.50-$14 range. The price has bounced around a lot since, but the stock is currently trading in the US$17-17.50 range and is trending higher. That's a healthy gain for those who bought in when we made the call.

In this week's Internet Wealth Builder, contributing editor Tom Slee recommends looking at some high-quality cyclical stocks. He particularly likes the prospects for Alcan (TSE, NYSE: AL) over the next couple of years. The shares are currently trading in the $58-$59 range (US$37-38) and he has put a target of $70 on the stock.

Tom Slee is also sticking with his buy recommendation on Fairmont Hotels (TSE: NYSE: FHR), which was spun out of Canadian Pacific last year. Our original price on the stock was $24.72 and it is now trading in the $45 range (US$30), which means we already have a profit of about 80%. However, Tom thinks there's more to come, and has moved up his target on this stock to $52.

The Internet Wealth Builder is published weekly (44 times a year). For membership information and to read a free sample issue:

http://www.buildingwealth.ca/Newsletter/index.cfm

TOP STOCKS is published monthly, with the next issue due out next week. We have extended our Introductory Offer of one year for just $23.95 plus tax until the end of May. For details:

http://www.buildingwealth.ca//bookstore/productdetail.cfm?product_id=300

Both newsletters are distributed by e-mail in text and html formats.

Some mutual funds are also turning in respectable numbers despite the miserable markets. Last month we told you about the Saxon Small Cap Fund. It's up about 0.5% in the past 30 days. If that doesn't impress you, remember that all the major indexes have dropped in value since the last issue of Investing Today was published. A fund that can make even a little money in that kind of situation is doing very nicely, thank you.

Finding a good international fund (one that only invests outside North America) is a tough proposition these days but we've come up with one we like. Here's an excerpt from the write-up we published in the May issue of Mutual Funds Update.

Trimark International Companies Fund. We have selected this fund for the MFU Recommended List, despite the fact it won't reach its third anniversary until October. It has been an outstanding performer since its 1999 launch, turning in first quartile results in 2000, 2001, and so far this year. It's been on a roll over the past six months, gaining 25.5%. The Trimark funds as a group have generally been strong of late and this one is no exception. Management is by Judith Adams, who has been in charge from the outset. Japan is her current country of choice, with a 21% portfolio weighting. The fund hasn't been around long enough to earn a formal risk rating from Globefund, but the Trimark entries are usually average to above-average on that count.

An RRSP-eligible clone is available for registered plans but so far its returns have been well below those of the parent fund, so we do not recommend it.

FUND FLASH
Name: Trimark International Companies Fund
Recent NAV: $5.33
On-line Database Rating: N/A
Suited to: Balanced investors
One-year return (to March 31): 2.9%
Load status: Optional front or back-end
RRSP status: Foreign content
How sold: Registered representatives
Phone number: 1-800-874-6275
Web site: http://www.aimfunds.ca

For information on how to subscribe to Mutual Funds Update and to read a free sample issue:

http://www.buildingwealth.ca/mfudemo.cfm

Millions of Canadians like to take a chance, whether it's on a lottery ticket, a video poker terminal, or a trip to a track or casino. If you're one of them, you'll want to take a look at Kendrew Pape's recent CBC radio commentary on the subject. You may be surprised at what you learn.

http://www.buildingwealth.ca/CBC/Index.cfm?CBCTranscript=248

One reader recently wrote to say he'd bought a used car that he subsequently discovered had been in an accident. Did he have any recourse, he wanted to know. Indeed he does, as our car expert Kendrew Pape explained in our current Question and Answer feature. Other topics this week include income-splitting with children, RRSP strategies, managed money accounts, and gold. Read it all at:

http://www.buildingwealth.ca/qa.cfm

Canadians pour millions of dollars into segregated funds each year. If you're one of them, you may be paying too much for what you're getting. Find out the details by listening to this week's Mutual Fund Minute audio feature.

http://www.buildingwealth.ca/MFM.cfm

We're clearing out our inventory of the 2002 Buyer's Guide to RRSPs and the 2002 Buyer's Guide to Mutual Funds. It's your chance to get these valuable investment books at 40% off the suggested retail price. But you must act quickly because the offer is good only as long as supplies last. See the Bookstore Specials on our Home page at

http://www.buildingwealth.ca for complete details.

While you're browsing through the Bookstore Specials, take a look at our Bronze, Silver, and Gold Investor Specials. There's a package for every need and price range.

If you live in the Montreal area, circle May 29 on your calendar. I'll be joining some of North America's top money managers on that night for a special investment presentation sponsored by Gerald Perron of BMO Nesbitt Burns. It takes place at the Hotel Omni, starting at 7 p.m., and will be of special interest to high net worth investors. To make a booking, call Christina Rinfret at 514-871-7031 or 1-888-548-7676. Admission is free but seating is limited so if you would like to attend, act now.

Please feel free to forward a copy of this issue of Investing Today to your friends or anyone you think might be interested. If you have received this copy from someone and would like to be on our regular distribution list, go to

http://www.buildingwealth.ca to sign up.

That wraps up our May edition. We'll see you again in early June.