I need a pep talk

[FinanceDude]

All I have to add is I am glad my mutual funds are not fully invested right now. Most American Funds are running 8-12% cash.....what a bunch of wusses.........

 

[Art G]

All except Washington Mutual which must be fully invested, just like those index funds.

 

[FinanceDude]

All except Washington Mutual which must be fully invested, just like those index funds.

It totally sucks having betas under 1.0 in my portfolio.......

 

[Art G]

It totally sucks having betas under 1.0 in my portfolio.......

Hey, risk and return has no place here! All that matters is cost!

 

[Art G]

Just as I suspected, post some actual stats and the critics disappear. This is why I don't bother. At least the third time this has happened on a thread.

 

[cute fuzzy bunny]

Sorry, I had to take my kid to school.

What a bunch of empty platitudes! I thought you guys were supposed to be pro's!

So let me summarize...

- The performance of these funds as reported by a major public financial web source is demonstrably worse than cheaper, lower turnover alternatives, but since you guys have so frequently produced facts to the contrary in the past (which nobody can find or point out) you feel its unnecessary to do so at this time.

- Turnover is good for you, even though it generates trading costs and taxable events and appears to have not been beneficial towards returns. An expense of .65% (with a 5.75% front end load) isnt that high, so a .15% expense rate with no front end load isnt worth considering.

- Art has "books" that tell him information that appears to be different from publicly available performance information.

- AMCAP should be compared with the S&P 500, a large cap blend fund, even though American says it is a diversified multi cap fund.

- AMCAP is "their worst performer", although in looking at Americans web site, it seems that AMCAP's returns are substantially similar to most of the other American stock funds. I see several dozen "equity income", "growth" and "growth and income" funds but they dont specifically say where I'd use one vs another. Perhaps one of the experts can tell me which one they recommend as a core equity portfolio holding? By the way, my "cherry picking" consisted of taking the very first fund on their list, their registered trademarked flagship fund. Generally when I see a fund family with lots of funds that appear to have the same information, its because they want to make sure a handful of them that perform well can be used in advertising while the losers can be whisked away and ignored as "cherry picking".

- When you hand over your money to a fund for them to invest it for you, its preferable that they keep a large percentage of this money in cash. Because thats definitely what I want my investment professionals to do...take my investing money and put it in a money market account. Is that really their best idea?

Dont worry Art, I'll be here all day. But having read all the worthy responses chock full of...absolutely no actual data and some ridiculous statements, I think the points been made.

But do go on. I hope for a pearl of investing wisdom that rivals your prior statement that bank cd's and debt in companies about to go out of business are roughly equal on the risk scale.

 

[cute fuzzy bunny]

Well, I have to say that I felt bad about any inadvertent cherry picking, so I made up a chart of the vanguard total stock market vs ALL of the american funds that invest primarily in US stocks, charted for total returns over the last 10 calendar years.

Note that this does not include any front end loads, soft costs from trading (which are substantial in actively managed funds) or any other costs.

Every one of them underperformed the Total Stock Market, excepting the "Growth Fund Of America (TM)", which holds ~20% in foreign stocks and is heavily weighted in oil companies. And that barely eked out an advantage up until recently when it came back to the same level as the TSM.

So pay a lot up front, pay more every year, enjoy lots of soft costs and taxable events, and end up with worse performance. Sounds good.

 

[cute fuzzy bunny]

Here's the 5 year chart. Same results.

 

[cute fuzzy bunny]

Three year chart, same results

 

[Nords]

So pay a lot up front, pay more every year, enjoy lots of soft costs and taxable events, and end up with worse performance. Sounds good.

I think you're wrestling with someone who [-]should be on your "Ignore Poster" list[/-] has made up their mind not to be confused with a bunch of distracting facts.

 

[cute fuzzy bunny]

Lastly, going the other direction, a full 15 year chart.

What an ass kicking. Man, I'd feel like a complete fool if I'd paid a front end load, high expense rates, enjoyed soft cost losses and had my ass handed to me by the Wilshire 5000 over a 15 year period.

How embarrassing.

Oh, and most major investment guru's like Buffet and Bogle have said that they consider the TSM to be an excellent primary/core portfolio holding.

 

[Notmuchlonger]

Pep talk go!

If this doesn't inspire the market. Frankly I do not know what will. I have a pair and they are comfy in a time of turmoil.

 

[cute fuzzy bunny]

Yep, these guys will need a pair of those to wiggle out of this one.

BTW, I did a 3 month chart as well but just didnt feel like posting it. Surely in these times of financial crisis a firm actively managed hand on the wheel and a big double digit cash balance would help the hapless investor navigate the down market we just experienced.

Uhh...no! Once again the TSM did better than every single American fund that invests primarily in US stocks.

 

[Art G]

Sorry, I had to take my kid to school.

What a bunch of empty platitudes! I thought you guys were supposed to be pro's!

So let me summarize...

- The performance of these funds as reported by a major public financial web source is demonstrably worse than cheaper, lower turnover alternatives, but since you guys have so frequently produced facts to the contrary in the past (which nobody can find or point out) you feel its unnecessary to do so at this time.

- Turnover is good for you, even though it generates trading costs and taxable events and appears to have not been beneficial towards returns. An expense of .65% (with a 5.75% front end load) isnt that high, so a .15% expense rate with no front end load isnt worth considering.

- Art has "books" that tell him information that appears to be different from publicly available performance information.

- AMCAP should be compared with the S&P 500, a large cap blend fund, even though American says it is a diversified multi cap fund.

- AMCAP is "their worst performer", although in looking at Americans web site, it seems that AMCAP's returns are substantially similar to most of the other American stock funds. I see several dozen "equity income", "growth" and "growth and income" funds but they dont specifically say where I'd use one vs another. Perhaps one of the experts can tell me which one they recommend as a core equity portfolio holding? By the way, my "cherry picking" consisted of taking the very first fund on their list, their registered trademarked flagship fund. Generally when I see a fund family with lots of funds that appear to have the same information, its because they want to make sure a handful of them that perform well can be used in advertising while the losers can be whisked away and ignored as "cherry picking".

- When you hand over your money to a fund for them to invest it for you, its preferable that they keep a large percentage of this money in cash. Because thats definitely what I want my investment professionals to do...take my investing money and put it in a money market account. Is that really their best idea?

Dont worry Art, I'll be here all day. But having read all the worthy responses chock full of...absolutely no actual data and some ridiculous statements, I think the points been made.

But do go on. I hope for a pearl of investing wisdom that rivals your prior statement that bank cd's and debt in companies about to go out of business are roughly equal on the risk scale.

WOW! I wish I weren't a professional so I could make up a bunch of incorrect charts to claim as fact!
As point of record, you didn't pick the very first fund, you picked the third fund because it had worse results. At least come clean and admit you're trying to post a phony picture.
As to paying .15% to have no fund manager Explain to me why that's a good thing? Why wouldn't you just buy the index yourself?
I agree with whoever suggested you put me on ignore. You can't learn anything anyway.
As to holding cash? Yeah, you're right! Being fully invested in the market on Wednesday was a good thing. Wouldn't want to have any cash to buy anything with yesterday. You do understand buy low sell high I presume?

 

[Art G]

BTW, you might want to consider adding in reinvested dividends into your charts. That's probably what screwed up your numbers. I'd bet a nickel you already knew that though.

 

[Marquette]

I've got books right in front of me, and in looking at EVERY A (all 15)share stock fund....

I posted AMCPX because that's the ticker you gave me. Can you chart the other tickers, maybe the ones you would recommend, against their respective indices (I notice you keep referencing the S&P 500, but are they really all large-cap blend funds?... heck, even AMCPX looks to be large-cap growth so it's not 100% aligned with the S&P 500 but it looks like it's close enough for Morningstar).

It'd also be helpful if the charts included front-load in the performance as not all of us are fortunate enough to avoid that haircut. Maybe your numbers do, but it wasn't clear.

 

[cute fuzzy bunny]

BTW, you might want to consider adding in reinvested dividends into your charts. That's probably what screwed up your numbers. I'd bet a nickel you already knew that though.

You're right, I did. But the dividends are included. Everything is in there, except the American Funds front end loads of 5.75%.

WOW! I wish I weren't a professional so I could make up a bunch of incorrect charts to claim as fact!

Actually Art, those are charts produced by MSN's Moneycentral, not ones I 'made up'. Anyone can go to the microsoft finance web site and reproduce the same charts through the same tedious process I went through to prove that you are totally, and absolutely wrong on all counts.

As point of record, you didn't pick the very first fund, you picked the third fund because it had worse results. At least come clean and admit you're trying to post a phony picture.

If you go to American Funds and click on 'fund information' and then 'All funds', AMCAP is the very first fund listed. Not the third. However on subsequent charts I put up ALL of the American funds that invested in US stocks and they ALL sucked. You ARE reading this stuff before responding, arent you?

Say, if you imply that I'm a liar and making things up, is it okay for me to call you clueless and say that you've thoroughly reinforced my opinions about most financial planners?

As to paying .15% to have no fund manager Explain to me why that's a good thing? Why wouldn't you just buy the index yourself?

Well you see, Art, its impossible to just "buy an index yourself" unless you feel like buying all 5000 stocks that are in the Wilshire 5000 and then buy/sell stocks as they're added and removed from the index over time. Most first year finance folks would normally know this, but I suppose I'll trade that piece of learning for that nickel you earned in the beginning of the post.

As to holding cash? Yeah, you're right! Being fully invested in the market on Wednesday was a good thing. Wouldn't want to have any cash to buy anything with yesterday. You do understand buy low sell high I presume?

Are you sure all of the American fund managers were eagerly buying stocks yesterday? Were they also employing cash to buy stocks on the other 5 days this past month when there was a bounce? I'm only asking because it seems that despite all this cunning buying and selling the results are just awful!

If I want to hold cash, I'll put it in a money market, not in a stock fund.

I agree with whoever suggested you put me on ignore. You can't learn anything anyway.

Well on those two counts you're absolutely right. I have no chance whatsoever of learning anything from you. And you've been on my ignore list since around your 5th post. Every once in a while I click on 'view post' to see what pearls of wisdom you're excreting today.

 

[cute fuzzy bunny]

Just to wrap this up, I did a search for all of these alleged prior threads where compelling information regarding the overperformance of American Funds vs their respective indexes was given to such an extent that no further discussion was warranted.

I found three threads the topic came up...including this one.

In two of the three some information about performance derived from American's marketing literature was posted. In both of those instances, charts and tables produced by publicly available performance information (yahoo, microsoft, google, etc) of data showing a very different result we presented and the proponents of Americans "market beating performance" discontinued the discussion.

Any specific "American Funds beat the xxx index from yy-yy" was severely cherry picked to represent ranges in which the indexes underperformed for a short period of time. Efforts to change these ranges to any other range were resisted, even when those ranges (5, 10, 15 years) was perfectly reasonable.

Hardly an excess of discussion or a compelling case made.

I leave it up to the reader to decide which is more credible...some cherry picked marketing data from the fund company that doesnt seem to match with publicly available data, or information from a number of major independent financial information sources.

 

[Alan]

I leave it up to the reader to decide which is more credible...some cherry picked marketing data from the fund company that doesnt seem to match with publicly available data, or information from a number of major independent financial information sources.

Bunny, thanks for all the work you've done on this. Your posts were clear and the sources of your data were well identified.

 

[cute fuzzy bunny]

Pleased to be of service. I just wanted to get to the straight story.

By the way, I forgot to mention that there are two other share classes that help you avoid the 5.75% front end load. The class B shares skip the load, you cant sell them for six years without incurring the load, and they charge you ~1.5% a year ER. The class C shares cant be sold for a year without incurring the sales load, are also ~1.5% a year, and after ten years convert automatically to a share class that requires an annual advisors fee payment.

I guess after holding an investment for ten years, you may need a little paid help with it?

 

[utrecht]

Bunny,

Youre doing alot or work to post what 99% of readers here already know. The 1% who doesnt know it, obviously will never be convinced so youre wasting your time .

 

[cute fuzzy bunny]

I think there are a lot more readers that are still trying to figure all of this stuff out than you imagine.

At a minimum, perhaps we've done a good job of identifying good and bad sources for reliable information so that in the future when they say other things and claim they have data to back it up, we all know better?

 

[Gone4Good]

WOW! I wish I weren't a professional so I could make up a bunch of incorrect charts to claim as fact!

I have no dog in this fight, but I am curious why you claim the performance charts posted by CFB are incorrect. You don't give a reason.

 

[cute fuzzy bunny]

Easy. They dont say what he wants them to say.

Many "investment professionals" offer to sell a product at a high price while creating the perception that the product is superior and gives greater rewards to the buyer.

If you take that perception away, the professional must find actual value to associate with the increased price.

Someone who isnt that good just tries to find a more gullible customer.

 

[Nords]

I think there are a lot more readers that are still trying to figure all of this stuff out than you imagine.
At a minimum, perhaps we've done a good job of identifying good and bad sources for reliable information so that in the future when they say other things and claim they have data to back it up, we all know better?

I wondered why this thread sounded so familiar:
http://www.early-retirement.org/forums/f44/pgx-33026.html

Nord, if you'll notice the thread you'll see that I'm not having a problem with the board, I seem to be having it with you. [Personal comments removed by Moderator].
A) I've never asked for adulation.
B) I'm not defensively rebutting anything. I'm holding a discussion with others who offer up their viewpoint and I'm responding in kind.
C) I'm not flinging a thing, and certainly not counter accusations.
D) It seems quite a few people are in agreement that newbies have to work their way in here.
E) I have no problem with the board behavior, I have a problem with you labeling me again and again.
To be honest, if you never responded to me again, I'd find it in my heart to overlook it. You want to be the board bully, I get it. I've seen your type plenty of times.