Morningstar announced their Fund Managers of 2007. The honors for top domestic stock fund manager went to Fidelity’s Will Danoff, manager of the 5 Star Rated Fidelity Contrafund (FCNTX), returning 19.78% vs. 5.49% for the S&P 500 index.

The top 25 holding of Contrafund as of 11/30/2007 are listed below. The stocks are ranked by the percent of assets invested in each stock, namely GOOG was the largest position while C was the smallest. Note that the top 10 positions returned the bulk of the performance.

The Fidelity Contrafund has been closed to new investors since April 28, 2006.

The bulk of Mr. Danoff’s performance can probably be attributed to following a few simple rules:

1. Identify appropriate trading candidates: The fund’s strategy is to invest in growth stocks, value stocks, including foreign and domestic issuers.
2. Trade a basket of the qualified candidates: The number of stock holdings was 339.
3. Implement position sizing to limit exposure and risk: Mr. Danoff and his research team must have this piece in place as every money manager should have.
4. Follow the buy and sell signals: The fund has an annual turnover of 76% so some kind of buy and sell signals are in place.
5. Avoid countertrend trading: The fund is long only, directional trading.
6. AVOID INSANE LEVERAGE: Mutual funds generally use very low leverage.

The lesson for investors and traders who want to reach their goals is this: use a balanced trading program. That means not betting it all on CROX, NTRI or FOREX. At least not at 1:100 leverge. :)