I've seen an alarming number of posts over the past year or so touting CGM Focus and its supposed merits.  I'm observing more and more posters allocating a significant percentage of their assets towards this fund.  I'm going to argue that this is a bad mistake.  IMO, this is not a good fund for any investor for any purpose.  In particular, it's a fund that novice investors should avoid.

If you've been investing in mutual funds for any time, you'll realize that every era has a fund like CGM Focus - a fund that seems to defy gravity with a super-aggressive investment strategy.  Such funds tend to attract naive or performance chasing investors who eventually start pushing the fund with almost religious zeal.  JAWWX and WOGSX are excellent examples of this.  Both funds had spectacular returns in the late 1990s, and whenever newbie investors would ask for advice, a large group of posters would push these funds. 

Unfortunately, spectacular recent performance based on aggressive strategies rarely persists.  JAWWX had a seductive performance history at the beginning of 2000 - much like CGMFX, nearly doubling NAV over the course of a year.  Directly afterwards, the fund lost about 60% of its value and has never recovered its peak NAV.  It was even worse for WOGSX - after going up about 200% in a couple of years, the fund lost 75% of its value.  Most investors didn't own these funds when they were establishing the spectacular gains.  They just got the one-way ride down.

Is there any basis to believe CGM Focus is a different story?  Heebner has been managing mutual funds since the 1980s.  His long-term performance is not particularly impressive.  He employs an unusually high-volatility strategy that most investors are unlikely to be able to tolerate over the long-term - for example, he had a period of underperformance that lated for nearly a decade in the 1990s.  For the twenty year period from 1982-2002, he produced a return of about 9.8% per year, underperforming the S&P 500.  Simply stated, there isn't a lot of evidence that Heebner is some kind of investing genius. 

Based on the sum total of his record, I'm inclined to say Heebner has some skill, but nothing close to what people are claiming around here these days.  This is a guy who employs a high volatility strategy - sometimes the volatility shows up on the upside, sometimes on the downside.  If you're willing to ride out the ups and downs, perhaps the fund is worth it over the long-term, but how many people are going to hold onto this fund the next time it declines by 50% or underperforms for a decade?  I really doubt it.  Do you know anybody who still owns WOGSX? 

Best,
Oildog