The three R’s always have been the building blocks when it comes to grade school.

But local investment expert Richard Dole said the first quarter of the new year brought new meaning to those letters as far as the stock market was concerned.

"Revolutions, radiation and rates," said Dole, one of four participants in the Star-Advertiser’s 10th annual investment contest.

Revolutions in the Mideast caused oil prices to soar, radiation in Japan accelerated opportunities for non-nuclear alternative energy, and interest rates inched upward but remained relatively low, thus stimulating the stock market, he said.

Despite those headwinds, the market moved ahead as did Dole and his three stock-picking counterparts.

The contest’s runaway first-quarter leader was Dwight Melton, whose four index funds in his hypothetical $20,000 portfolio posted a scorching 27.2 percent gain. Melton, co-founder of the Hawaii Stocks and Options Group and a three-time contest winner, finished the quarter with $25,444.42.

Dole, CEO of Honolulu investment adviser Dole Capital LLC, chalked up a 9.8 percent gain to $21,949.26 while Barry Hyman, private client group vice president for the Maui branch of FIM Group Ltd., was up 3.6 percent to $20,714.18; and Norm Caris, a Kauai resident and managing director for institutional sales for Caris and Co., gained 2.9 percent to $20,577.47.

Melton, who won the investment contest in 2004, 2005 and 2007, said investors are torn as global events keep buffeting stocks.

"On the one hand, they are still at times engaging in so-called bargain hunting following market selloffs as investors generally remain optimistic on the economy," he said. "On the other hand, the more cautious are taking profits on fears of inflation, a global outlook that is now in flux with as many questions as answers on the Middle East, North Africa and, most recently, Japan, as well as still-frothy equity valuations."

Melton sold three of his four holdings at the start of the second quarter but held on to his best performer, Direxion Energy Bull 3X, an energy index fund that rose 53.6 percent. The index returns 300 percent the price performance of the Russell 1000 Energy Index.

Despite focusing his index picks on metals and energy, Melton said the telecom sector offers the best upside for the rest of this year.

"The group stands to continue benefiting from the trend toward wireless and networking devices," he said.

Dole said he’s staying pat with the picks he made at the start of the year. Through the first three months, pharmaceutical giant Pfizer was his best performer with a 17.2 percent gain.

He said sectors that provide infrastructure for rebuilding in Japan will be the beneficiaries of the current economic environment.

"There will be demand for building materials, energy and technology," he said.

Hyman, who won the contest in 2006, 2009 and 2010, said investment sentiment is taking a glass half-full outlook.

"Following each bout of market weakness, whether in response to any weak economic report, natural disaster or geopolitical upheaval, stock prices have proved resilient, continuing to climb the so-called ‘wall of worry,’ " he said.

Hyman’s best performer last quarter was the Cohen & Steers Infrastructure Fund, which gained 9.8 percent.

He said many high-tech companies are selling at "terrific risk-adjusted levels" now and are worth looking at by investors. Other areas he likes are health care, agriculture, energy and telecommunications.

Caris said he expects the stock market to fall about 5 percent from now until the end of the year "as the Fed moves away from easy-money policies and prices once again reflect an economy that is still muddling through."

He calls technology the best sector to be in for the remainder of the year.

Caris, who won the contest in 2008, benefited in the first quarter from his two "short" positions in semiconductor manufacturer MIPS Technologies and Market Vectors Gold Miners ETF, a gold miners index fund, as both stocks declined.

A short sale means the shares are borrowed and then sold, with the borrower benefiting if the stock goes down.

MIPS Technologies returned a profit of 30.8 percent while Market Vectors Gold Miners ETF produced a 2.2 percent gain.