Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 02-08-2008, 12:28 PM   #81
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Art - we don't really need to get to the level of picking certain funds - you said it yourself that to do so would be 'cherry-picking' and I certainly agree.

Did you read the Bernstein link I posted? Here is my summary of part of it.

Consider the top 30 funds from the early 70's. You would probably agree that they were as well-regarded in that time as American Funds are today. Common wisdom would suggest that investing in those 30, which had a good track record at the time would lead to market-beating results. Do you disagree with any of that?

Take those 30, and compare against the lowly s&p 500 through 1998 (admittedly the paper is a bit old). Go ahead, look at the results.

Thats all I am saying. Odds are (demonstrably) poor that your American Funds will outperform a passive portfolio over 20+ years. I don't have an agenda, except that people come here to look for advice and debate topics. I think its important to see the other side of the argument.
innova is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-08-2008, 12:29 PM   #82
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
Quote:
Originally Posted by ERD50 View Post
No agenda Art G. It was simply the first on their alphabetical list (their drop down menu) that was matched to the S&P, which is the easiest and most relevant to compare to. It takes a bit of work to compare, so I stopped there - maybe you have a better source for comparison?

So show me that the other 13 were better. You are the one that made the claim. I'm interested. Show me that you are.

-ERD50
ERD50, you seem to have fast fingers, maybe you can help and then I can help. I have NOT been able to find the TOTAL return of the S&P from 1957-2007. (In 1957, the "old S&P Index 90" was "modified" into the "new" S&P 500 index)........

I agree that the index itself does NOT include the return of reinvested dividends, but in all fairness, most if not all mutual fund returns include reinvested dividends on the fund side, so we need to include them for a fair comparison. If you can find me the TOTAL return including reinvested dividends of the S&P, I can post the numbers of AF........thanks.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 12:30 PM   #83
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Quote:
I thought we wanted to look at long term numbers, like 15, 20, 25 years? At least that was the earlier thought..........
It appears he was posting his reply without the benefit of this longer-term data (or he hasn't analyzed it yet).
innova is offline   Reply With Quote
Old 02-08-2008, 12:33 PM   #84
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
Quote:
Originally Posted by innova View Post
Consider the top 30 funds from the early 70's. You would probably agree that they were as well-regarded in that time as American Funds are today. Common wisdom would suggest that investing in those 30, which had a good track record at the time would lead to market-beating results. Do you disagree with any of that?

Take those 30, and compare against the lowly s&p 500 through 1998 (admittedly the paper is a bit old). Go ahead, look at the results.

Thats all I am saying. Odds are (demonstrably) poor that your American Funds will outperform a passive portfolio over 20+ years. I don't have an agenda, except that people come here to look for advice and debate topics. I think its important to see the other side of the argument.
For all I know, there were NO American Funds in those 30.......does he name the 30? Kind of like the "Nifty 50" stocks of way back when...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 12:34 PM   #85
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by ERD50 View Post
No agenda Art G. It was simply the first on their alphabetical list (their drop down menu) that was matched to the S&P, which is the easiest and most relevant to compare to. It takes a bit of work to compare, so I stopped there - maybe you have a better source for comparison?

So show me that the other 13 were better. You are the one that made the claim. I'm interested. Show me that you are.

-ERD50
ERD, innova posted some spread sheets you can check out. I could go pull up the research for you, but what's the point? You are the immovable object.
BTW, alphabetically, that was not the first fund, AMCAP is. I guess I appreciate your time. It's your money. As financedude mentioned, don't forget to look 20 years, that was your original point I believe.
Art G is offline   Reply With Quote
Old 02-08-2008, 12:34 PM   #86
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
Quote:
Originally Posted by innova View Post
It appears he was posting his reply without the benefit of this longer-term data (or he hasn't analyzed it yet).
OK.......well I asked for his help, he seems to be able to search the Internet far quicker than me.

Can we agree that the S&P 500 has a beta of 1.0?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 12:40 PM   #87
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by innova View Post
Art - we don't really need to get to the level of picking certain funds - you said it yourself that to do so would be 'cherry-picking' and I certainly agree.

Did you read the Bernstein link I posted? Here is my summary of part of it.

Consider the top 30 funds from the early 70's. You would probably agree that they were as well-regarded in that time as American Funds are today. Common wisdom would suggest that investing in those 30, which had a good track record at the time would lead to market-beating results. Do you disagree with any of that?

Take those 30, and compare against the lowly s&p 500 through 1998 (admittedly the paper is a bit old). Go ahead, look at the results.

Thats all I am saying. Odds are (demonstrably) poor that your American Funds will outperform a passive portfolio over 20+ years. I don't have an agenda, except that people come here to look for advice and debate topics. I think its important to see the other side of the argument.
innova, can you direct me to your link, I'm not seeing it. And again, don't cherry pick American Funds, put 14 names into a hat, pull out three names and see how it works out for you. I used to be a non-believer myself, I chased returns, and then I saw a down market and saw how tough it was to make up for a negative 15% in one year.
BTW, overall, the S&P has not been that great of an investment. It just so happens that for a period of time in the 90's it outperformed most funds (probably because Fidelity was coming out with a new fund every week). I'd see Scott Burns using a one year comparison, then he had to go to 3 years to make his numbers work, then 5 years. However, historically (and by this I do mean 20 years +) buying the index ain't so hot.
P.S. without reading your link, I'd bet many great performing funds of the 70's are long gone, as are their managers. To compare what Peter Lynch did with his succeeding managers isn't fair. One more point for American Funds, they don't have any single manager funds.
BTW, thanks for your open minded attitude.
Art G is offline   Reply With Quote
Old 02-08-2008, 12:46 PM   #88
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
OK..........I guess I'll make a confession. I use AF exclusively for my clients that are in funds, and I have owned them myself for 17 years.

I have no regrets, looking back. Not one client in my career as an FA has called up and screamed: "What did you do to me, those American Funds are terrible, and I'm firing you"!!!!!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 12:47 PM   #89
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
OK innova, I found your link. Notice they compare the S&P to the top 30 funds. I never stated this was a fair comparison. Keep in mind that right now the best 30 funds are all gold funds. However, backtest those and you'll find they've probably greatly been outproduced by other funds. Originally we were talking about an easy way to outperform the indexes and the averages. I never said anything about chasing top returns. Heck, internet funds were returning over 100% for a year and a half, that doesn't mean they are the best funds for the next few years.
I really think we've branched off in a different direction now.
Art G is offline   Reply With Quote
Old 02-08-2008, 12:52 PM   #90
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Quote:
However, historically (and by this I do mean 20 years +) buying the index ain't so hot.
P.S. without reading your link, I'd bet many great performing funds of the 70's are long gone, as are their managers. To compare what Peter Lynch did with his succeeding managers isn't fair.
You would need to read the link to see why you're wrong on the point of historically the s&p 500 not being a good investment - its not just the 90's.

Why aren't many of the formerly great performing funds around, I wonder? Could it be that when performance turned south they were merged / eliminated?

FWIW, as I said before - this is really about passive vs. active, using the s&p 500 as an example only. I'm sure your portfolio of AF does well - the overriding point here is that based on past history of active funds(in general), its is overwhelmingly UNLIKELY you will earn excess return(alpha) in the long term, and you would be fortunate to equal market return - especially after paying larger expenses compounded over many years.

Article on persistance of past performance:
Past Performance
innova is offline   Reply With Quote
Old 02-08-2008, 12:53 PM   #91
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Here's my confession, I used to chase returns. I used to try to find that fund that's blowing away the market. Back in the early 90's I met with a guy from American Funds who, when I asked how come American Funds are underperforming others, replied, "hey, we're not the best, but we're not the worst". I laughed in his face! What the heck kind of recommendation was that?!! Then I watched what happened in 2000, 2001, 2002 and saw that while many funds gave back results, overall American Funds stuck pretty close to even. I realized that the one or two down years were taking me five to get back to where I was, so now I try to avoid wild swings. Can I guarantee American Funds will continue at this rate? Heck no! But their strategy of buy and hold stocks with dividends seems sound.
Of course with that said, they were a few months ago the largest holder of GOOG, so perhaps they need to remember their own strategy.
BTW, one of their managers told me, if they buy a stock and want to sell it before a year, they had better have a pretty good reason why. They spend two to three weeks visiting any company they invest in before buying. Hard to knock the strategy there. JMO
Art G is offline   Reply With Quote
Old 02-08-2008, 12:53 PM   #92
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
I have 7 funds I am posting, I just need ERD50 to give me the total return of the S&P 500. I am listing the returns of these funds at MOP (market offering price) so we take loads into account, and for the benefit of all:

Fund Date of Inception Lifetime Avg Return
AMCPX 5/1/1967 12.06

AGTHX 12/1/1973 15.10

AMRMX 2/21/1950 12.20

ANCFX 8/1/1978 13.99

AIVSX 1/1/1934 12.72

AWSHX 7/31/1952 12.53

AMECX 12/1/1973 12.30
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 12:54 PM   #93
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by innova View Post
You would need to read the link to see why you're wrong on the point of historically the s&p 500 not being a good investment - its not just the 90's.

Why aren't many of the formerly great performing funds around, I wonder? Could it be that when performance turned south they were merged / eliminated?

FWIW, as I said before - this is really about passive vs. active, using the s&p 500 as an example only. I'm sure your portfolio of AF does well - the overriding point here is that based on past history of active funds(in general), its is overwhelmingly UNLIKELY you will earn excess return(alpha) in the long term, and you would be fortunate to equal market return - especially after paying larger expenses compounded over many years.

Article on persistance of past performance:
Past Performance
innova, again I've already answered, but you are wrong in this regard. They don't discontinue funds, they don't merge funds, and they may be more passive overall than the index funds.
Art G is offline   Reply With Quote
Old 02-08-2008, 12:59 PM   #94
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Round and round we go.

Quote:
Notice they compare the S&P to the top 30 funds. I never stated this was a fair comparison. Keep in mind that right now the best 30 funds are all gold funds.
Read carefully. The 30 funds were not sector funds, they were well-diversified funds.

Quote:
Originally we were talking about an easy way to outperform the indexes and the averages. I never said anything about chasing top returns. Heck, internet funds were returning over 100% for a year and a half, that doesn't mean they are the best funds for the next few years.
Since the evidence is so strong against persistance of short-term performance (see previous link), the only way then to get market-beating returns over longer timeframes is to chase returns, is it not?

Its clearly not easy to do so, and the vast majority of funds fail at it.

Quote:
Then I watched what happened in 2000, 2001, 2002 and saw that while many funds gave back results, overall American Funds stuck pretty close to even.
If you had a proper asset allocation (including bonds) for your ability, willingness, and need to take risk you would not have suffered large losses in 2000-2002. For example, my portfolio which is 80/20 overall equities/bonds lost only 6% in the worst of those years.

Besides, we don't care about year to year anyway. We care about total compounded return, after-taxes (if applicable). Thats the only return that we can spend.

Quote:
BTW, one of their managers told me, if they buy a stock and want to sell it before a year, they had better have a pretty good reason why. They spend two to three weeks visiting any company they invest in before buying. Hard to knock the strategy there.
Absolutely. They do seem better than most active managers.
innova is offline   Reply With Quote
Old 02-08-2008, 01:00 PM   #95
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
No, you didn't!

Quote:
Lifetime Avg Return
May I point out that this is largely irrelevant. We need to know compounded return. Average returns are not meaningful.
innova is offline   Reply With Quote
Old 02-08-2008, 01:03 PM   #96
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
Quote:
Originally Posted by innova View Post
Why aren't many of the formerly great performing funds around, I wonder? Could it be that when performance turned south they were merged / eliminated?
Typically funds are merged to hide bad performance. All I know is that continues to be a problem.

Quote:
FWIW, as I said before - this is really about passive vs. active, using the s&p 500 as an example only. I'm sure your portfolio of AF does well - the overriding point here is that based on past history of active funds(in general), its is overwhelmingly UNLIKELY you will earn excess return(alpha) in the long term, and you would be fortunate to equal market return - especially after paying larger expenses compounded over many years.
Well, that is the classic case for investing in passive/index funds. There are SOME people out there (like me) who DON'T index, but not for the UPSIDE (some of which I am willing to give up) but the DOWNSIDE (something no index fund can hedge).

I must be the only person in America that's OK when I am down 10% when everyone else is down 20%, as an example. However, I think that's ok.........

Article on persistance of past performance:
Past Performance[/quote]
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 01:13 PM   #97
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,483
Quote:
Originally Posted by innova View Post
May I point out that this is largely irrelevant. We need to know compounded return. Average returns are not meaningful.
From their website:


Average annual total returns with sales charge [MOP (maximum offering price)]: Returns assume all distributions are reinvested and reflect applicable fees and expenses. Fund results are for Class A shares and reflect deduction of the maximum sales charge of 5.75% for equity funds and target date funds.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-08-2008, 01:13 PM   #98
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 26,806
Quote:
Originally Posted by Art G View Post
ERD, innova posted some spread sheets you can check out. I could go pull up the research for you, but what's the point? You are the immovable object.
You made a statement - I asked you to back it up. How does that make me 'immovable'?


Quote:
BTW, alphabetically, that was not the first fund, AMCAP is. I guess I appreciate your time. It's your money. As financedude mentioned, don't forget to look 20 years, that was your original point I believe.
You are right - I was going down the list looking for stock funds, wasn't sure if AMCAP was or not so I skipped it at the time, moved on to AMRMX - but anyway. AMCAP underperforms for the 1, 3 and 5 year periods also, but it also outperforms for 10 year:

AMCAP

LOAD ADJUSTED RETURNS
1-Year: 1.32%
3-Year: 5.60%
5-Year: 10.88%
10-Year: 8.22%


VFINX
1 yr 5.39%
3 yrs 8.49%
5 yrs 12.69%
10 yrs 5.83%


I'm more interested in seeing how a fund did in bull/bear markets from the past 20 years than I am specifically in it's total 20 year performance. Especially the bear markets. That tells me something about the volatility that I am concerned about.


Quote:
Originally Posted by FinanceDude
OK..........I guess I'll make a confession. I use AF exclusively for my clients that are in funds, and I have owned them myself for 17 years.

I have no regrets, looking back. Not one client in my career as an FA has called up and screamed: "What did you do to me, those American Funds are terrible, and I'm firing you"!!!!!
No offense FinanceDude, but I'm not sure that the people that feel they need the services of an FA would be the ones to compare the after-expense, risk-adjusted returns of an investment. Offhand, the two funds I looked at appear to have done well when you go back ten years, so they should be happy if that is true of the ones you put them into, and they have been in them for ten years.

I'm trying to figure out if they (or some strategy) is/are appropriate for someone like me.

OK, many in this forum do seem averse to active funds. I honestly do not think that is from ignorance or bias - it is from lack of compelling data. Then the big claims from the active fund fans are often followed by 'I know I'm right - you find the data to back up my claims!'.

-ERD50

PS -I see there were a number of posts while I was typing - I just don't have time to respond right now, pls don't take that as a lack of interest! Real life calls!
ERD50 is offline   Reply With Quote
Old 02-08-2008, 01:15 PM   #99
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Quote:
Well, that is the classic case for investing in passive/index funds. There are SOME people out there (like me) who DON'T index, but not for the UPSIDE (some of which I am willing to give up) but the DOWNSIDE (something no index fund can hedge).
Understand your position there. Have you ever heard this:

"Just prior to the second worst bear market in the postwar era (73-74), mutual-fund cash reserves stood at only 4%. Cash positions reached about 12% in the ensuing low"

"In the market correction of mid-1990, when the S&P 500 fell 14.7%, actively managed funds fell an average of 17.9%"

--Swedroe (Only guide to a winning investment strategy you'll ever need, 2005).

Would you be willing to expand on the topic of downside protection? Are you relying on the fund manager to protect the fund from loss or do you have some other mechanism?

I'll share mine: I take risks only on the equity side - my bond holdings (20%) are IT treasury and TIPS. Safest bonds w/ risky stocks.
innova is offline   Reply With Quote
Old 02-08-2008, 01:18 PM   #100
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
No offense FinanceDude, but I'm not sure that the people that feel they need the services of an FA would be the ones to compare the after-expense, risk-adjusted returns of an investment.
Tangental to FinanceDude, who enjoy reading on here, but the tipping point for us in firing our Ameriprise advisors was the minute we sat down and figured out our after-expense return compared to comparable risk indexes.
Marquette is offline   Reply With Quote
Reply

Tags
fidelity


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Has anybody analyzed the various lazy investment portfolios FinanceGeek FIRE and Money 6 07-30-2007 12:31 PM
Accumulators (and others) using Target Retirement or other "life-cycle" funds Dude FIRE and Money 17 01-29-2007 11:44 AM
Fidelity Freedom Funds Da Nag FIRE and Money 4 10-23-2006 01:21 PM
Fidelity Promark funds sooner FIRE and Money 11 09-18-2006 05:09 PM
Fidelity index funds with exp ratio 0.1% or less amt FIRE and Money 15 10-15-2004 04:17 PM

» Quick Links

 
All times are GMT -6. The time now is 05:08 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.