Investment thread (Mutual Funds)

I'd say go with the index funds..

 

Never buy class A or B shares. Only buy no-load mutual funds or index funds.

 

I generally tell most everyone to avoid actively managed mutual funds as they usually just produce returns that are in line with the broader market indices. In addition you have to pay fees to the management team and other administrative and advertising costs.

I would suggest go with ETF's due to the relative ease of buying and selling your investment. Furthermore they have tax advantages and carry much lower expenses.

Here is a good, comprehensive list of ETF's: http://dvtechtalk.com/specialreports/specialreport1.htm

I generally hold actively manaed mutual fund managers in disdain, due to their complacency in generating returns. Reason is they have no incentive to really perform better since they take a management fee on their tens of billions in assets. Thus their only motivation is not really to outperform, but rather just get the tidy management fee on their huge capital.

I'm a professional money manager, and tell all my family members to avoid regular actively managed mutual funds. I personally invest in individual stocks, futures and commodities using long/short strategies. But its really hard for me to recommend to someone who doesn't spend all day analysing the markets, to go and invest in individual securities.

By the way, its a good time to be invested in the Russell 2000 and the SP500.

 

Absolute lie by morons that have never been in the industry.

Where did you hear that? The radio?

Not saying I'm exactly an "expert, but I did hold a job in the securities industry for 4 years, and was even asked to be an analyst (which, I foolishly turned down.)

There are "bad" funds out there, but to degrade them by the class of their share is completely moronic.

However, I do enjoy how everyone thinks they can do it on their own now, thanks to adverts. FYI: Discount brokers have been around over 50 years. There is a reason people hire professionals.

Here's a good example: We all know how to nail two pieces of wood in place. We all know how to screw pipes together. Why bother with an architect? For $8/per assembly piece, we can do it ourselves!

Sounds r****ded, eh?

And yet there are so many people willing to gamble their life savings on this strategy.

 

Please tell me which fund you are a professional in? Oh, and a hedge fund doesn't count.

Just say you are a day trader or tell me names of who you work with?

EDIT: I really don't try to bust people. But this sh*t pisses me off. Somebody who "says" he's a money manager. I can go to any financial advisor, or hell, go to bigcharts.com

And I want to see proof. I don't like "money managers" claiming stakes unless I can prove it.

Not trying to be a jack-ass, but I'm not buying your strategy, either.

 

I work for a fund based out of Houston, NYC and the Caymans. It is a fund of funds type investment firm, meaning we allocate investors monies into other investment firms mostly other hedge funds. In my firm there are three other portfolio managers, who specialize in other areas such as emerging markets, fixed income and US equities. My expertise is in futures and currencies based firms. I credit me being at my current position due to connections rather than education or merit. But since being at my position, I've worked hard and done well.

I started in lowly sell side research at Highland in Dallas, then moved to trading and then currently am working as part of strategic allocation on the macroeconomic scale.

Day trading is generally fool's money in the market. I've never met a day trader claiming to be a money manager.

I think your definition of money manager is different from mine. There are plenty of portfolio managers at places like Smith Barney, who just act as custodians of clients account and just take orders from higher net worth clientele. Then there are ones on the buy side, which are much more attractive type jobs.

I'm not really sure what strategy you are referring to other than me recommending ETF's. What do you suggest the original poster invest his money in then?

 

And where did you work? Call me a moron if you will, but every part of that hedge fund I can send gaping holes through. Like porno gaping holes through.

I appreciate your ability to understand the market, but please, at least, get a 7, 65 and a 63, or a 66.

 

I used to work for American Express Financial Advisors dip****. Now Amerprise. I've got my Series 7, 66, and Texas Insurance licenses.

Again VUL's, Annuities, and loaded mutual funds are a waste of your money. Max out your 401k, then max out your IRA with no-load mutual funds or idex funds. If you need life insurance buy a term policy instead of a VUL. Never turn your life insurance policy into an investment.

 

damn fatty...why the anger? i'm a professional trader...mostly day trading. yeah the description of his fund is less than vague but what kind of porno gaping holes can you drive thru his fund? and i'm pretty sure mr. brightside has all a 7, 55, and 63 like me if not more random numbers that all us to do stuff with other people's money. and isn't the 66 only so you can sell like insurance and annuities and stuff like that?

 

LOL, another Fatty classic.

 

not trying to rip you mr. brightside cause you've always seemed pretty solid when it comes to the market but i just have a pet peeve when professionals makes stuff sound overly complicated....strategic allocation on the macroeconomic scale. sound like just basically buying large cap stuff with a lot of money.

it's kind of like me saying that i am a short term arbitrage trader who looks for discrepancies in the values of common stocks, preferred stocks, and ETFs based on intraday order flows. secondarily, i also provide liquidity to the market place for large institutional orders that cause significant disruptions in price. i also watch for merger arbitrage opportunities where stocks become overvalued/undervalued relative to their merger/buyout price with respect to merger closing time and risk associated with the merger based on prior historical values of similar merger/buyouts.

there is probably a cooler way i could have said it, but basically i have 10 million in capital and i try to find whatever crazy stuff in the market there is on a daily basis and try to avoid train wrecks.

and fwiw we have a lot of well paid fools at our office but i know what you mean when you say it's generally fool's money.

 

LOL@ some poor guy from Texas Tech telling us how to get rich.

 

We're still on the first page of an investment thread. Congratulations guys!

 

I can show you plenty of load funds that have superior performance compared to no-loads (even after expenses and fees). They are not a "waste" of your money. They are more expensive but many of the top money managers are in load funds.

If you're buying a load fund, what you should really be paying for is the advice that goes along with it from a financial advisor.

As far as your opinion on annuities, another generalization with only half truths. Today, many annuities have "income benefits" that guarantees an income stream without annuitizing. Is it more expensive? Yes. However, many risk advserse people are willing to pay the fee to receive market returns with a "guarantee". This is an emotional cost many are willing to absorb, those who otherwise would only invest in CD's with a negative real rate of return.

Also, the tax deferred feature of annuities are quite attractive. Are you subject to AMT? Mutual fund distributions work against you. You want to rebalance your portfolio? Can you do that without creating a taxable situation in mutual funds? What about embedded gains? Your funds go down in value and you still receive a 1099? What about non-qualified dividends at your marginal income tax bracket?

Life Insurance. Im not a big VUL fan but permanent insurance does have its benefits. Imagine you are 35 and buy a 20 year term. You are now 55 and have developed cancer. You are unisnurable and have piled up tons of medical debt. You think anyone would insure you? Good luck. Some people have a family history of poor health (even if they're healthy now) and a permanent policy does make sense. Insurance is to hedge risk but that risk may be beyond 10, 15, 20, or even the 30 years of Term.

I don't know what your background is but your generalizations and simplistic analysis leads me to believe that you were not a good advisor and you're much better off in your current field.

 

you are probably better off just going with a major ETF like the SPY (s&p 500) or IWM (russell 2000) or IWN (russell 2000 value). it's far too expensive on just a commission basis to try to simulate a mutual fund. furthermore, you should not try to simulate a mutual fund with that many different stocks. remember, the ETF are always reweighting themselves based on whatever valuation changes occur and it's too much work for you to try to simulate a fund. if you do decide to try to have a portfolio with stocks in it then it should never be bigger than 5 to 7 different companies at the most. that will make you plenty diversified as long as you make sure you are in different industries with each stock.

even though i am not a huge fan of jim cramer he does do a good job with his "am i diversified?" segment where people call in and tell them their 5 stocks. also, i think he does do a solid job of educating new investors as long as you take his stock picks with a grain of salt. his general rules are pretty basic and solid.

 

So if you want to dollar cost average $100/month, is an ETF cheaper than buying a load fund?

 

This thread (so far) is like a meeting with the company's IT gurus. Everyone has something to say, but I leave the meeting with no idea what anyone has said.

 

i know absolutely nothing about mutual funds and costs associated with buying them. i don't think i have ever even looked. kind of odd for a guy like me who trades so much. i do know that some can have stiff penalties if you take your money out early. i think my dad got stung by that one time. i was just saying that it is cheaper for him to buy an ETF rather than attempt to simulate a fund by buying 20 stocks on his own.

also, i am not sure if $100/month is enough to get past transaction costs. i think even those sharebuilder places are like $3 a trade which means you get killed by transaction costs. i guess if you can find some place that will give you free trades every month then it is cheaper.

and what's the expense ratio on the SPY? like .08%? i think that would certainly be cheaper than most load funds. but in the end it boils down to performance and i haven't seen many funds that consistently beat the major indices due to their investment limitations. i guess if you can find a manager that you feel comfortable in and who has a consistent track record with better than average returns after expenses and low risk then i would say go for it.

hell i'll even post my stock picks on here for free if you guys want.

 

sorry if it sounds like that. please feel free to make us clarify anything. i'd like to make the market as simple as possible for people who don't live in this crazy world.