An Investment Lesson Courtesy of the World Series

   Dear Friends,

   I confess. I'm not a New York Yankees fan. I grew up in the shadow of Boston's Fenway Park – the same ballpark where my mother watched Ted Williams play when she was a young girl. Although I live in Texas now, Red Sox loyalty is an inherited trait, as unchangeable as my brown eyes.

   That being said, I was inspired by Johnny Damon, the Yankees' left fielder. In the ninth inning of Game 4 of the World Series, Damon seized an unusual opportunity. And it reminded me of the opportunities investors can take advantage of, as long as they stay focused.

   Johnny Damon was on first base with two outs. The game was tied and the Philadelphia Phillies were anxious to take it into extra innings.

   Waiting for "The Shift"

   At bat was Mark Teixeira, a left-hander who is known for hitting into right field. In fact, he's so predictable that opposing teams shift their fielders to the right to better defend against him. Damon had seen teams shift for Teixeira time and time again. And every time it happened, he wondered if he would ever get a chance to exploit the poor coverage of the left side of the infield.

   Against the Phillies, Damon saw his chance. He stole second base on the very first pitch to Teixeira. As soon as he reached second, Damon popped up, saw that third base wasn't covered, and ran.

   So in the course of one pitch, Damon not only stole second base -- he also stole third base. The double steal wasn't dumb luck or just a chance opportunity. It was something Damon said he had planned for over a year.

   To me, Johnny Damon's patience and willingness to exploit an opportunity creates a remarkable analogy to the investment world.

   Market Shifts To Watch:

   The stock market rally that started in March 2009 appears to be losing its legs. We may be entering a period when the market's tide won't lift all boats. But this doesn't mean there won't still be tremendous opportunities awaiting investors -- if they're prepared and patient.

   Even in sideways or down-trending markets, there are continual shifts within the market. And just like Johnny Damon against the Phillies, if you're observant, you can exploit.

   One such shift that I've written about in the past involves closed-end funds. In October 2008 and again in March 2009, we saw massive daily sell-offs where investors liquidated everything but the kitchen sink. Interestingly enough, while nearly everything fell, closed-end funds sold off harder than the rest of the market.

   The result:  dozens of funds were left trading at enormous discounts to the value of their underlying assets (their will benefit from the rebound in crop and fertilizer prices -- a trend we are just beginning to see.

   After this summer's run-up, the market could pause to catch its breath. But that doesn't mean investors should rest. This is precisely the time to look for overall market shifts and the pockets of opportunity they represent. It's also a time when a little more patience may be required.

   Johnny Damon waited all year to execute his double-bagger. But I think if you asked him, he would tell you it was worth the wait.