Ken Heebner, Former High Flier

Jim Surowiecki is wondering whether it would make sense to put money into CGM Focus, the formerly high-flying mutual fund run by Ken Heebner, which has managed to lose half its value in less than four months.

The answer, I think, is no. Ken Heebner strikes me as in many ways similar to Bill Miller: someone who was clearly a great bull-market fund manager, but who has come quite spectacularly unstuck in this bear market.

More generally, mutual funds aren't like companies, which can become undervalued during a stock-market rout. They're marked to market daily, and that mark is their value.

As far as I know, Heebner has not demonstrated any ability to catch a falling knife. Instead, he made a series of smart/prescient/lucky macro bets: short technology in 2000, long housing in 2001, and then a rotation out of housing and into energy and commodities in 2005. What are the chances that he's going to make another smart/prescient/lucky bet right around now? No greater, I suspect, than the chances that any other fund manager will do likewise.

On the other hand, Heebner is a truly spectacular case study when it comes to the magazine-cover indicator. His Fortune cover came on the issue dated June 9 -- pretty much the exact high point of his mutual fund.

I do wonder, now that Heebner has been shown to be human, whether he will still have the ability to move markets in stocks he's not even recommending. My guess is yes -- until the next hot mutual-fund manager comes along and takes his place.