Results 1 to 22 of 22

Thread: Are Mutual Funds for Losers ?

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Are Mutual Funds for Losers ?

    (snip)"Blending Zen with Wall Street, Town's anyone-can-do-this advice, in his best-seller "Rule #1," amounts to: Don't lose money, find great companies, know their worth and acquire them at 50 percent off. Beyond that, he says the traditional advice -- invest in mutual funds, diversify, buy and hold -- is strictly for losers.

    Let's cut to the chase: What's wrong with mutual funds?

    First, if you intend to stay ignorant about investing, if you don't intend to get the education to tell a good business from a not-very-good business, you're going to have to give your money to somebody and let them invest it. In that case, the bad choice of the choices is mutual funds. They're going to take nearly a percentage point a year and they're not going to deliver anything that an index fund doesn't deliver. So just go and get an index stock fund. Buy SPDRs or Diamonds (Dow Jones ETFs) or the Nasdaq and be done with it. Then you won't have all these management fees and you're going to (earn) the index for sure, which is the best you can do in a mutual fund over any 20-year period of time anyway. So you might as well do an index.

    You're also a doubting Thomas when it comes to a balanced portfolio, right?

    We're going to separate the world into two groups of people: those who are ignorant and are going to remain so about investing -- and they have to do mutual funds, what other choice do they have? -- and those who are going to learn what the best investors in the world have known for 100 years, which is just the basic fundamentals of what a great company looks like and what it's worth. When you know that it's a great company and you know what it's worth, then you'll know if it's on sale. You buy it on sale and you're off and running.

    When you can buy Johnson & Johnson on sale, buy it. You're done. You don't need a mutual fund when you can buy Johnson & Johnson on sale; it's been around 120 years, it's going to be around another 120 years. That's not hard. That's all I want to tell people -- it's not hard. You don't need to buy lots of things, you can buy just one good stock and you'll be in good shape.

    Surely you're not advocating that people put all their money in one stock? It may have worked for you, but are you saying this is a smart investment strategy?

    For getting started, the key thing is to find one good one. Then, as you get better and better at it, you can pull more and more money out of mutual funds and maybe end up with four or five really good companies you like in four or five different areas of the market.

    What about the argument for diversification? Shouldn't investors protect themselves from market volatility by diversifying among a few dozen companies?

    One of my favorite Warren Buffett quotes is, "Diversification is a protection against ignorance." It's not meant to be mean, but if you don't know the difference between a wonderful business that is on sale and a bad business that isn't, you must diversify. That's your only logical choice. If you can't tell the difference between things, then you have to spread your money out across a lot of things. But when you can tell the difference, then diversification hurts your portfolio performance."(snip)

  2. #2
    Banned Katrine's Avatar
    Joined
    Nov 2003
    Posts
    13,855
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: Are Mutual Funds for Losers ?

    Aaaah, this up on my computer at the office. Not sure if I should be reading it. At least its not Kiyosaki....

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  3. #3
    Banned Katrine's Avatar
    Joined
    Nov 2003
    Posts
    13,855
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: Are Mutual Funds for Losers ?

    Ok, not too offensive, although not particularly informative for your average investor. Fundamental analysis isn't that quick or easy, at least not if you do it correctly. As always, my strategy almost always involved a blend of everything anyway.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  4. #4
    Featured Member minnow's Avatar
    Joined
    Sep 2007
    Location
    USA
    Posts
    1,003
    Thanks
    242
    Thanked 519 Times in 315 Posts
    Blog Entries
    10
    My Mood
    Twisted

    Default Re: Are Mutual Funds for Losers ?

    Interesting, but has a bit of arrogant tone, somewhat like speeder that drove triple digit speeds across the state without seeing a cop saying- "Driving the speed limit is for suckers". (Author made his big score by buying stocks during 1980-82 recession, DJA was 630, I think at the trough, rocketed up to 2000 in 1987. Prior to 1982, DJA hit 1000 in 1968, then took some hits, and essentially stayed between upper hundreds, and 1K for a decade & a half).
    I digress, why argue with success?

    As for buying index funds, maybe no mgt. fee, but each purchase redemption surely involves a brokers fee, something that would only be a flea bite if you invested large sums of money(how large is large? Article doesn't say), and made relatively few transactions. (Make 1 single $10K purchase every Christmas bonus time???). Also, minimum initial and periodic investment?? Article doesn't say.

    For "small investors", no load mutual funds are a good start. Initial investment ammounts vary, but regular periodic (monthly,say) can be made for $50 minimum at some places, incurring no transaction fees. Try doing that with a broker 12x per yr. Individual circumstances differ, some dancers may afford to invest over $2K/mo.

    This argument doesn't apply to everyone here on the board, but many corporate 401K plans have employer matches, with the "better ones" being 50% or more. Also, every dollar that participant puts in reduces federal income tax by 28-35cents for most participants. Thats' 28-35% of your dollar that will help you TODAY, not some unspecified point in the future. I'd like to ask author if I invest in his highly touted fund if he'd be willing to kick in 50% of what I put in, and also if he could talk Uncle Sam into taking ammount that I put in off my taxable income computations. I'd love to hear that pitch to Uncle Sam.

    Anyway, his plug for J&J well taken, their qtrly dividend pmts. have effective annual rate of roughly 2.7%, which is better than a lot of checking with dividend accts. Still, article & tone begged for counterpoint.....

  5. #5
    Banned Katrine's Avatar
    Joined
    Nov 2003
    Posts
    13,855
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: Are Mutual Funds for Losers ?

    [QUOTE=minnow;1273595]
    This argument doesn't apply to everyone here on the board, but many corporate 401K plans have employer matches, with the "better ones" being 50% or more. Also, every dollar that participant puts in reduces federal income tax by 28-35cents for most participants. Thats' 28-35% of your dollar that will help you TODAY, not some unspecified point in the future. I'd like to ask author if I invest in his highly touted fund if he'd be willing to kick in 50% of what I put in, and also if he could talk Uncle Sam into taking ammount that I put in off my taxable income computations. I'd love to hear that pitch to Uncle Sam.
    [/QUOTE

    Are you kidding???? 50%??? Perhaps up to 3-6% of earnings, but no more. Seriously, I look at emp. 401K every day of my life, and that's just not true.

    And as nice as a tax-break is today...there is almost no doubt in the minds of everyone in my industry that inc. taxes are going up, way UP! Why sacrifice a little today to pay a shitload more tomorrow?

    Minnow, you have a good grasp on these concepts, not trying to knock you. Hopefully, the other readers here will benefit from all of our input.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  6. #6
    Featured Member minnow's Avatar
    Joined
    Sep 2007
    Location
    USA
    Posts
    1,003
    Thanks
    242
    Thanked 519 Times in 315 Posts
    Blog Entries
    10
    My Mood
    Twisted

    Default Re: Are Mutual Funds for Losers ?

    Katrine; No, I'm not kidding. Perhaps I should have made it more explicitly clear that I'm talking PERSONAL CONTRIBUTIONS, Not ANNUAL INCOME, when I crunched those numbers. OK, lets take someone making, say 50K/yr. They can afford to invest $5k, but don't want to do it all at once, but in monthly installments. If they invest in index fund, they're getting zero back from Uncle Sam, plus paying 12 seperate broker fees, which likely effectively knocks a few hundred off.

    Now, if they enroll in 401K, company w. 50% match will kick in $2.5K(* $3K max for this employee max, so in this case, gets everything coming to him out of 50% match). This employee likely in 28% bracket, so having $5K less taxable income will net him(her) $1400 more take home pay/yr. What to do with it?? Pay down debt, make bigger house payment, get $100 more per/mo in lapdances, buy more stock, the list goes on.....

    One can see that 401K person has $8900 working for THEM, vs maybe $4500 by NOT choosing 401K option, and opting for stock picking instead.

  7. #7
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    I totally see where the author is coming from. If you'd rank the investing styles in terms of smartness, it would be like

    i) Value Investing (Read fundamentals, like the author is suggesting)
    ii) Hedge Fund/Private Equity/Arbitrage Investing(You have to be rich to begin with)
    ii) Intelligent Asset Allocation (Balanced portfolio of Indexed funds)
    iii) Mutual Funds
    iv) Bonds/CDs/Money Markets
    v) Chasing the next hottest investment style
    vi) Day trading. Momentum investing, Technical Analysis
    vii) Lottery, Las Vegas
    viii) Internet and other free money scam


    Value Investing is real hard work and you have to be very quick at reading annual reports, assesing the competitive landscape, highly disciplined (If you panic every time Melonie posts, by definition you can't be a Value Investor), visionary, think for yourself, read, read, read, read, read.... It is easy to advocate this style, but fewer than 1% have the resources, time and smarts to successfully do it.

    Hedge Fund/Private Equity/Arbitrage look for free money. But, you have to be rich to even play in this field

    Intelligent Asset Allocation is my personal advice for the mass (98% of them). I.e a rebalanced portfolio of US large, Bonds, International, & US Small usually beats many money managers and mutual funds. The biggest advantage of this is it requires 15 minutes / Year and usually doesn't cost you anything

    Mutual funds is still better than a lot of other options and you may still end up in the upper 25% of Wealth creation.

    I don't have to explain the rest, but your money is better of in a CD than any of the other styles you chose below. Will you hear success stories in them? Of course. Media will always report outliers and you personally will hear plenty of anectodal evidence of wealth creation. But, unless you have spent your career in a particular field that you know inside and out, statistically, you'll lose money in all of the other investing styles

  8. #8
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Are Mutual Funds for Losers ?

    Just because someone doesn't want to study stocks, hedge funds, and all the dynamics of investing doesn't mean they are losers.

    That is why there are so many different investment vehicles. I know a man who just put money in a small savings account his entire working life. He now has half a million dollars. I know others who have lost their ass in their 401ks. Many Investment brokers like to make people feel stupid and like a loser. When you feel dumb well its easier to sell you anything.

    The bottom line is that the smart investor sticks with their comfort level. For some stocks are way to risky, they would be checking it all the time, and pulling out their hair. For others the return on a CD is just too damn low. The older a person is the less risk they should take. If you are living off your investments risking loosing a large portion of it doesnt make sense.

    That is why I tell people to educate themselves first. Find what is right for you instead of letting someone making you feel stupid, just because you dont take the new big investment fad, so they can sell you a bunch of stuff you dont need.
    Last edited by Vamp; 11-07-2007 at 08:10 AM.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  9. #9
    God/dess britneyireland's Avatar
    Joined
    Jan 2002
    Location
    Dallas
    Posts
    2,568
    Thanks
    283
    Thanked 602 Times in 340 Posts
    Blog Entries
    1
    My Mood
    Inspired

    Default Re: Are Mutual Funds for Losers ?

    I agree with the main point of the article (not that people who buy mutual funds are stupid) Mutual funds rate themselves on whether or not they can beat the S&P 500. Some years they do, some years they dont depending on sector rotation. So for someone who doesn't want to learn modern portfolio theory, just buy the SPY, be instantly diversified.... and be done with it.

    Mutual funds aren't evil, but they aren't a vehicle that I feel comfortable investing in. To each her own....
    Rebecca Avalon







  10. #10
    God/dess doc-catfish's Avatar
    Joined
    Nov 2002
    Location
    123 Tornado Alley Way, Hooterville USA
    Posts
    6,322
    Thanks
    0
    Thanked 36 Times in 30 Posts

    Default Re: Are Mutual Funds for Losers ?

    When you can buy Johnson & Johnson on sale, buy it. You're done. You don't need a mutual fund when you can buy Johnson & Johnson on sale; it's been around 120 years, it's going to be around another 120 years. That's not hard. That's all I want to tell people -- it's not hard. You don't need to buy lots of things, you can buy just one good stock and you'll be in good shape.

    Hmm, interesting.

    5 year performance of Johnson and Johnson (JNJ) versus Fidelity Balanced Fund (FBALX).

    Former SCJ now in rehab.

  11. #11
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by doc-catfish View Post
    When you can buy Johnson & Johnson on sale, buy it. You're done. You don't need a mutual fund when you can buy Johnson & Johnson on sale; it's been around 120 years, it's going to be around another 120 years. That's not hard. That's all I want to tell people -- it's not hard. You don't need to buy lots of things, you can buy just one good stock and you'll be in good shape.

    Hmm, interesting.

    5 year performance of Johnson and Johnson (JNJ) versus Fidelity Balanced Fund (FBALX).

    Two flaws in your post
    i) Past five years returns is not a meaningful comparison to deduce anything
    ii) The author specifically said to buy J&J when it is on sale. Stocks go on sale when there are global events hurting every stock like Sep 2001 and the recent credit crunch. If you bought JNJ at those times, you'd do well long term.

    The Five year comp chart is particularly useless in this context. There are probably thousands of assets that beat JNJ in the past five years.

  12. #12
    God/dess ViolaStrings's Avatar
    Joined
    Dec 2004
    Posts
    4,219
    Thanks
    84
    Thanked 236 Times in 120 Posts

    Default Re: Are Mutual Funds for Losers ?

    MELONIE - tell me how to invest!

  13. #13
    God/dess LuckyOne's Avatar
    Joined
    Sep 2006
    Location
    LAS
    Posts
    3,118
    Thanks
    28
    Thanked 259 Times in 98 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by Vamp View Post
    Just because someone doesn't want to study stocks, hedge funds, and all the dynamics of investing doesn't mean they are losers.

    That is why there are so many different investment vehicles. I know a man who just put money in a small savings account his entire working life. He now has half a million dollars. I know others who have lost their ass in their 401ks. Many Investment brokers like to make people feel stupid and like a loser. When you feel dumb well its easier to sell you anything.
    The bottom line is that the smart investor sticks with their comfort level. For some stocks are way to risky, they would be checking it all the time, and pulling out their hair. For others the return on a CD is just too damn low. The older a person is the less risk they should take. If you are living off your investments risking loosing a large portion of it doesnt make sense.

    That is why I tell people to educate themselves first. Find what is right for you instead of letting someone making you feel stupid, just because you dont take the new big investment fad, so they can sell you a bunch of stuff you dont need.
    Ok, a little OT but you bring up some VERY INTERESTING points. Thank you for sharing that perspective- I think there's a lot of truth to that.

    In addition, as far as how much people choose to invest some people need the security of having savings and retiring comfortably. Others don't mind working hard and living withing their means.

    I guess the moral of the story is PEOPLE ARE NOT COOKIEs. Lol! (In other words, we are not cut from cookie cutters.)

    Interesting post, Vamp.

  14. #14
    God/dess doc-catfish's Avatar
    Joined
    Nov 2002
    Location
    123 Tornado Alley Way, Hooterville USA
    Posts
    6,322
    Thanks
    0
    Thanked 36 Times in 30 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by xanfiles1 View Post
    Two flaws in your post
    i) Past five years returns is not a meaningful comparison to deduce anything
    Agreed. Where you get on and off the roller coaster, whether you lump summed or averaged, and how much you buy in/cash out when you do can have more effect than what those lines suggest.

    Quote Originally Posted by xanfiles1 View Post
    ii) The author specifically said to buy J&J when it is on sale. Stocks go on sale when there are global events hurting every stock like Sep 2001 and the recent credit crunch. If you bought JNJ at those times, you'd do well long term.
    Often of course, its during those times which middle class people can saddled with some sort of financial hardship (loss of employment, previously invested nest egg tanking, high utility bills, ARM spiraling out of control) that makes getting in at those "on sale" times particularly difficult.

    Quote Originally Posted by xanfiles1 View Post
    The Five year comp chart is particularly useless in this context. There are probably thousands of assets that beat JNJ in the past five years.
    Agreed again. The whole point of the chart is to show that the laymen investor would have been just fine taking the mutual fund route (assuming they picked the right fund), and saving all that time they would have had to spend on stock research for their family, hobbies, etc. It wasn't to suggest that the mutual fund was better than JNJ or any other asset.

    In any case, while I don't necessarily disagree with the author's point, I do become a bit skeptical when someone touts this "conventional wisdom is wrong, the world is out to get you, therefore buy into what I'm saying" mindset (whether the subject is investing, alternative medicine, multi-level marketing, what have you) because its often just camouflage to pitch a snake oil product/service which advocates a far riskier course of action than the one conventional wisdom suggests. Sadly, a lot of conspiracy minded people will buy into the hype and get burned. That to me is when the real "losers" come out.
    Former SCJ now in rehab.

  15. #15
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Are Mutual Funds for Losers ?

    Two flaws in your post
    i) Past five years returns is not a meaningful comparison to deduce anything
    ii) The author specifically said to buy J&J when it is on sale. Stocks go on sale when there are global events hurting every stock like Sep 2001 and the recent credit crunch. If you bought JNJ at those times, you'd do well long term.

    actually, there is a third flaw ... that comparing stock share price to fund NAV allows dividends to fall through the cracks. JNJ has averaged a 2.46% dividend payment to stockholders over the past year that provides an extra 'payout' on JNJ stock ownership which is independent of the increase in share price. In general, mutual funds that own dividend paying stocks simply cash the dividend checks and use them to prop up the NAV price of the fund or to offset fund management expenses.


    MELONIE - tell me how to invest!
    here's my 3 step plan ...
    #1 latch onto bankers and brokers coming into the club, and encourage them to drink a lot
    #2 convince them to take you to the VIP room, and listen carefully to what they are discussing amongst themselves while you act like a dumb blonde with big tits so that they don't guard their conversation
    #3 invest accordingly !

  16. #16
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by Melonie View Post

    here's my 3 step plan ...
    #1 latch onto bankers and brokers coming into the club, and encourage them to drink a lot
    #2 convince them to take you to the VIP room, and listen carefully to what they are discussing amongst themselves while you act like a dumb blonde with big tits so that they don't guard their conversation
    #3 invest accordingly !
    Actually Bankers and Brokers are the worst source of investing information.
    Warren Buffett says he is able to invest wisely because he is so far away from Wall Street and doesn't get distracted by day-to-day events that happens in Wall Street.

    The Wall Street guys are the most corrupted by the "Herd Mentality" which you should guard against while investing (especially if you are thinking individual stocks)

  17. #17
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Are Mutual Funds for Losers ?

    ^^^ yeah, well, they were also the only ones that had access to AliBaba IPO shares, which earned more money in a week on a percentage basis than Warren Buffett's hedge fund earned in the last year !

  18. #18
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by Melonie View Post
    ^^^ yeah, well, they were also the only ones that had access to AliBaba IPO shares, which earned more money in a week on a percentage basis than Warren Buffett's hedge fund earned in the last year !
    I don't know what you are implying.
    You could have still bought AliBaba at opening and still made the money. Of course nobody knows how any stock will do on the opening days. You could have also lost money too. (Brokers and Bankers don't have a clue as to how the market will react to any IPO stock)

    If you are talking about access to pre IPO shares, I'm pretty sure you can't make them give it to you at a Strip Club. When you call them the next morning, I think you know what their reaction would be

    If Bankers and Brokers knew about investing, they wouldn't have had to work so hard and I would have definitely seen a couple of Billionaire brokers and bankers on the Forbes 400 Richest American lists

  19. #19
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Are Mutual Funds for Losers ?

    ^^^ your argument would be more convincing if it was the least bit factually correct ...



    (snip)"The stock performance is the largest high tech offering since Google went public in 2004, yet it remains off limits to U.S. investors until December.

    By W. David Gardner
    InformationWeek
    November 6, 2007 06:35 PM

    Chinese Internet company Alibaba.com saw its shares triple on Tuesday after its initial public offering rocketed 192% on the Hong Kong stock exchange.

    Alibaba.com sold 858.9 million IPO shares, or 17% of its enlarged share capital, in a deal handled by Deutsche Bank, Goldman Sachs, and Morgan Stanley. The stock performance raised $1.5 billion in the largest high tech offering sinceGoogle (NSDQ: GOOG) went public in 2004. (snip)

    (snip)"Brokerage firms report that their customers have been hounding them to buy Alibaba shares, but an old U.S. Securities and Exchange regulation outlaws individual U.S. investors from buying the foreign company's shares until December."(snip)

    In other words, under the umbrella of 'institutional investing' bankers and brokers were allowed to ride on the gravy train (along with their favored clients), while Joe Schmo individual investor must wait until all of the upside is gone !

  20. #20
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by Melonie View Post
    ^^^ your argument would be more convincing if it was the least bit factually correct ...

    http://www.informationweek.com/news/...leID=202803116

    (snip)"The stock performance is the largest high tech offering since Google went public in 2004, yet it remains off limits to U.S. investors until December.

    By W. David Gardner
    InformationWeek
    November 6, 2007 06:35 PM

    Chinese Internet company Alibaba.com saw its shares triple on Tuesday after its initial public offering rocketed 192% on the Hong Kong stock exchange.

    Alibaba.com sold 858.9 million IPO shares, or 17% of its enlarged share capital, in a deal handled by Deutsche Bank, Goldman Sachs, and Morgan Stanley. The stock performance raised $1.5 billion in the largest high tech offering sinceGoogle (NSDQ: GOOG) went public in 2004. (snip)

    (snip)"Brokerage firms report that their customers have been hounding them to buy Alibaba shares, but an old U.S. Securities and Exchange regulation outlaws individual U.S. investors from buying the foreign company's shares until December."(snip)

    In other words, under the umbrella of 'institutional investing' bankers and brokers were allowed to ride on the gravy train (along with their favored clients), while Joe Schmo individual investor must wait until all of the upside is gone !
    Sure, they had access to AliBaba. Two months down the line they'll have access to Aladin or Pocahontas. They'll all remember the AliBaba story and hoard it to the limit. The IPO market tanks making them hold worthless papers.
    That is what I'm implying at. Brokers and Bankers don't have a clue as to what happens. Aren't you the one who keeps posting articles about Merrill Lynch and Citigroup?. I mean if they knew where the market is heading, they wouldn't be writing down these assets in Billions and Dollars.

    Sure they will have hits, but they also have their huge losses. In the end, they aren't head by much

  21. #21
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Are Mutual Funds for Losers ?

    Aren't you the one who keeps posting articles about Merrill Lynch and Citigroup?. I mean if they knew where the market is heading, they wouldn't be writing down these assets in Billions and Dollars.
    It appears that you are missing MY point. For the past several years the CDO activity of Merrill and Citigroup has provided astronomical levels of earnings for these companies, for their bankers and brokers, and for the 'whale' investors that were also allowed to participate. The CDO problem wasn't a problem until the 'new media' and certain politicians let this updated version of ENRON's off-balance-sheet accounting out of the proverbial 'bag'. Now that the issue IS out of the bag, Merrill and Citigroup will attempt to turn to someone else to share these losses - i.e. the US taxpayer - and will probably be successful ( the fed ponied up 90 billion dollars of taxpayer money to fund the Super SIV bailout fund so far). Also, like Mozilo the Gorilla at Countrywide, you can be absolutely certain that the brokers and bankers at Merrill and Citigroup, along with their 'whale' clients, took profits before this whole mess went extremely public and now have those millions sitting safely in a private account somewhere while Joe Sixpack's 401k / mutual fund account takes major losses as the share value of Merrill and Citi shares held in those retirement / mutual fund accounts takes a dive !!!

  22. #22
    Veteran Member
    Joined
    Sep 2005
    Posts
    426
    Thanks
    0
    Thanked 9 Times in 9 Posts

    Default Re: Are Mutual Funds for Losers ?

    Quote Originally Posted by Melonie View Post
    It appears that you are missing MY point. For the past several years the CDO activity of Merrill and Citigroup has provided astronomical levels of earnings for these companies, for their bankers and brokers, and for the 'whale' investors that were also allowed to participate. The CDO problem wasn't a problem until the 'new media' and certain politicians let this updated version of ENRON's off-balance-sheet accounting out of the proverbial 'bag'. Now that the issue IS out of the bag, Merrill and Citigroup will attempt to turn to someone else to share these losses - i.e. the US taxpayer - and will probably be successful ( the fed ponied up 90 billion dollars of taxpayer money to fund the Super SIV bailout fund so far). Also, like Mozilo the Gorilla at Countrywide, you can be absolutely certain that the brokers and bankers at Merrill and Citigroup, along with their 'whale' clients, took profits before this whole mess went extremely public and now have those millions sitting safely in a private account somewhere while Joe Sixpack's 401k / mutual fund account takes major losses as the share value of Merrill and Citi shares held in those retirement / mutual fund accounts takes a dive !!!
    You are just giving undue credit to these bankers and brokers. Sure, they make money. But they make money in transactions (boat loads of them). But on an average they are *never* good stock pickers. That is what I'm trying to get at and is the whole point of the post.

    i.e you can't woo them at a Strip Club and get great advice of which stock to invest in. Brokers and Bankers are so busy, they don't even have a minute to spend on what exactly a company does (to me that should be the basic for stock picking).

    No outsider ever got rich by playing the IPO market

Similar Threads

  1. ING Streetwise Mutual Funds
    By xxambyrrxx in forum Dollar Den
    Replies: 1
    Last Post: 09-29-2008, 11:12 PM
  2. CDs or Mutual Funds currently?
    By Adelina in forum Dollar Den
    Replies: 4
    Last Post: 05-16-2007, 07:03 AM
  3. CD or mutual fund right now?
    By Adelina in forum Dollar Den
    Replies: 7
    Last Post: 04-26-2007, 01:39 AM
  4. Replies: 12
    Last Post: 09-14-2006, 10:53 AM
  5. Mutual Funds
    By lilac666 in forum Dollar Den
    Replies: 23
    Last Post: 10-25-2003, 12:42 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •