It’s official: You can reduce your investment risk simply by chucking darts at a list of stocks, then buying them.

That’s if you believe a Nobel economist, of course. His crude “experiment” was the start of “modern portfolio theory” decades ago. The downside, however, was that with a reduction of risk came a dampening of profits. So scratch that idea.

How about this? A startling study in the late 1970s showed that owning a portfolio of large U.S. companies with international divisions drops your risk 10% below a domestic stock portfolio. Much better. But that wasn’t the eye-popper…

The study also found that owning stocks in international companies cuts your risk in half…

Take that, “efficiency” theorists! Yet the stuffy professors still tried to refute these results. It was a losing battle, though, as more studies emerged, laden with more evidence that international stocks reduce risk.

But the

Today we are featuring top-performing "Health" equity mutual funds, which primarily invest in equity securities of healthcare and related companies.

Investors can find such funds by checking out the entire list of the Zacks #1 Rank Health Equity Funds list.

3 Healthy Picks

Morgan Stanley Health Sciences A (HCRAX) seeks capital appreciation. The fund normally invests at least 80% of assets in common stocks (including depositary receipts) of health science companies throughout the world.

Michael Nolan has been the lead manager at the fund since June 2008. The fund has an expense ratio of 1.50%. It distributes dividends annually.

The fund's top holdings include Johnson & Johnson (JNJ), Pfizer Inc. (PFE) and Merck & Co. Inc. (MRK).

Fidelity Advisor Health Care A (FACDX) was incepted in September 1996 and seeks capital appreciation. It is non-diversified.

Conservative investors may wish to evaluate public stocks in terms of values as they might be viewed for a private acquisition.

That would minimize the risk of buying into a bubble and the “greater fool” approach to investing, which assumes that someone will pay you more for something you paid too much for in the first place.

Of course, conservative investing based on takeover value also greatly reduces the universe of eligible stocks, because by far most stocks are priced beyond private takeover value.

While one overvalued, high multiple public company can use its inflated stock as currency to buy another overvalued company sporting a lower multiple, a cash buyer or a leverage buyer must look at affordability and cash-on-cash return, or debt service capacity of the target.

One of the measures that private acquirers look at is Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV / EBITDA).

Private buyers (those playing …

Neither wealth nor the size of an investment portfolio mitigates the effects of inflation. The poor feel the deleterious effects sooner, but uncontrollable growths in operating expenses can cripple even giant corporations.

The stock market is an empowering means of maintaining real values of cash inflows. This investment route is egalitarian. It also allows an additive approach. Some of today’s most influential investors have made modest entries into a stock exchange not so long ago. The system of ADRs allows U.S. investors to buy stocks from countries where inflation may be lower than at home.

Four stock strategies can keep investors ahead of inflation:

1. Let the dividend track records guide stock picks. When did the corporation last skip a dividend? Does the past Return on Average Equity exceed the forecast rate of inflation? 2. Which stock has a Beta of around one? Does it belong to an industry with superior prospects in an inflationary