Trading Mutual Funds

[ace8]

So, finally, the real reason for this post! Does anyone know of any better sources of information on the “possible” change in price of a mutual fund after the market close?

Assuming you mean NAV= Price

Net asset value (NAV) represents a fund's per share market value. This is the price at which investors buy ("bid price") fund shares from a fund company and sell them ("redemption price") to a fund company. It is derived by dividing the total value of all the cash and securities in a fund's portfolio, less any liabilities, by the number of shares outstanding. An NAV computation is undertaken once at the end of each trading day based on the closing market prices of the portfolio's securities.

At a basic question level, there can be no change given the definitions.

Reading more into your question, I will respond with a question. Are you looking for arbitrage opportunities? I would assume the mutual fund companies would not appreciate "attempted arbitrage".

 

[OldShooter]

... Reading more into your question, I will respond with a question. Are you looking for arbitrage opportunities? I would assume the mutual fund companies would not appreciate "attempted arbitrage".

Yeah. The industry went through that about 15 years ago. Some fund investors were being allowed to buy at yesterday's price after seeing the far East market closes for today. IIRC Scudder was one of the funds that got fined and there were several others. Today, no fund company will knowingly permit this kind of time-zone arbitrage. There may have been some other similar arbitrage sins committed as well, I just don't remember.

But if that's what the OP has in mind he is wasting his time. The idea may be illegal as well.

 

[MRG]

Yeah. The industry went through that about 15 years ago. Some fund investors were being allowed to buy at yesterday's price after seeing the far East market closes for today. IIRC Scudder was one of the funds that got fined and there were several others. Today, no fund company will knowingly permit this kind of time-zone arbitrage. There may have been some other similar arbitrage sins committed as well, I just don't remember.

But if that's what the OP has in mind he is wasting his time. The idea may be illegal as well.

This scandal?

I remember that, dark days in the industry.



http://www.investmentnews.com/artic...funds-still-recovering-10-years-after-scandal

Once the initial sparks were set, the Securities and Exchange Commission kept piling on the lumber, with charges, enforcement proceedings and fines against such household names as Alliance Capital Management LP, Columbia Management Advisors Inc., Edward D. Jones & Co. Inc., The Goldman Sachs Group Inc., Invesco Funds Group Inc.,*Janus Capital Group*Inc., Marsh & McLennan Cos. Inc.,*Morgan Stanley & Co.*LLC, Prudential Securities and Wachovia Corp.

 

[Sandy & Shirley]

As I’ve said previously, I’m not day trading funds, I rebalance a couple times a year, so trading is done every 3 to six months. I’m retired and looking for a way to look at the market monthly, not daily.


My personal experience is that the well managed funds do just a little better than the ETFs, just by a fraction of a point!


What I really try to do is look for any kind of trends and keep a higher percentage in those market sectors, the others are not ignored, just not as heavily invested.


The chart I just showed illustrates 1 year of history, I have data for the past 3 years and can even expand that if I want to.

I’m not looking for arbitrage, now that I am retired my primary interests revolve around my membership to the S.K.I. club, Spending our Kid’s Inheritance. I did the looking at the market multiple times a day thing when I was working, now it is time to relax and check out the market on a monthly basis.

 

[JackJester]

I have a mix of ETFs and MFs, but mostly ETFs. My MFs are the basic Index funds that I just buy and hold like SWPPX S&P Index Fund. My ETFs are things that are not as big contributors to my portfolio, like Gold (SGOL) or REIT (SCHH). I buy/sell once a month, usually the first week of the month. I mostly buy since I am still working towards ER (4.5 years to go). Basically I look at my AA, see where I am over or under on my target, and then buy/sell whatever I need to reach that balanced AA. I enjoy it, so 12 times year is good for me. If it looks like I have some flexibility in choosing what to buy/sell that day, I like the fact that ETFs show me what I WILL be getting when make the trade. If SGOL is down towards the closing, I may buy it vs something else to get that extra edge (mostly mental positive feelings since you can’t time the market of course). I have heard that ETFs have lower fees than MFs, but I have not done the comparison with my specific assets and the choices with my brokerage (Schwab) to see if it is meaningful. I never buy/sell early in the day, always after lunch. Bottom line -- you need an AA you are loyal to. And then, whether you use MFs or ETFs is really driven by personal preference and how much buying/selling you do.

 

[bada bing]

The 17.6% of my holdings in “Cash” are in DNP and RVT, Select IncomeDividend funds which provide a steady ROR of about 7.5%
in both up and down markets!

I just wanted to comment on this idea. You can take it for what it's worth.
I suppose you can define "cash" as whatever you like, but DNP & RVT are
a long ways from being what the mainstream view of a "cash" investment
is. Here is a comparison between them and compared to PSLDX, which is
a 100% leveraged balanced fund - a pretty risky, high volatility investment.
You can see that PSLDX beats both for return with lower volatility. The
point isn't that I can cherry pick a better performing investment in hindsight,
it is that neither DNP or RVT can be expected to behave like a "cash"
investment when uncertainty comes back to the market. We are
experiencing a good run of kind market conditions, but it's not going to last
forever because it never does.

portfolio visualizer

 

[bingybear]

As I’ve said previously, I’m not day trading funds, I rebalance a couple times a year, so trading is done every 3 to six months. I’m retired and looking for a way to look at the market monthly, not daily.


My personal experience is that the well managed funds do just a little better than the ETFs, just by a fraction of a point!


What I really try to do is look for any kind of trends and keep a higher percentage in those market sectors, the others are not ignored, just not as heavily invested.


The chart I just showed illustrates 1 year of history, I have data for the past 3 years and can even expand that if I want to.

I’m not looking for arbitrage, now that I am retired my primary interests revolve around my membership to the S.K.I. club, Spending our Kid’s Inheritance. I did the looking at the market multiple times a day thing when I was working, now it is time to relax and check out the market on a monthly basis.

If you are going to track sectors in your spreadsheet, are you also using sector MFs? If you are going to use actively managed funds, how do you intend to monitor the effects of the management?

I've know people who have used used momentum investing of MF somewhat as you describe, but they monitor the fund performance, not sectors that may not represent MF performance well.

If that is what you want to do, just do it. Be aware of the taxes and fees of your decisions.

 

[rayinpenn]

I heard good things about China over the weekend. Should I buy a China fund today? Knowing that the US market are relatively flat and that the China market is up over 1% today might affect my decision on buying that fund today. Is this the start of something great? Is it overpriced now? We all have to make our own decisions, it’s just nice to get more information before making that decision.

S&S
You are scaring me chasing returns like that rarely works out. I hope to God your not doing it with funds you absolutely need and you continue to be fully diversified.

Did it occur to you that by the time you buy in the pros have already beaten you to it. Find another hobby.

 

[OldShooter]

... I heard good things about China over the weekend. Should I buy a China fund today? Knowing that the US market are relatively flat and that the China market is up over 1% today might affect my decision on buying that fund today. Is this the start of something great? Is it overpriced now? ... it’s just nice to get more information ...

@S&S if there is anyone who knows the answers to fortune-telling questions like that, you are not going to find him here. He is on a tropical island somewhere drinking from a glass garnished with an orchid and being hand-fed peeled grapes.

Said another way, there is no "information" available to answer your questions. There are only guesses about a future that no one can predict.

@Rayinpenn is absolutely right in everything he says. With respect, questions like this are amateur hour stuff and this kind of investing is pretty much doomed to failure over the long haul. The sad thing is that the market data is so noisy (up/down/down/sideways/up), that people will sometimes get lucky and will conclude from that that they are geniuses. They eventually end up being poorer geniuses than they otherwise would have been.

I recommend Fooled by Randomness by Nassim Taleb

 

[RobLJ]

If you're not day-trading mutual funds (which you shouldn't), then as someone suggested (and you're picking up nickels in front of the steamroller), use a tracking or correlated ETF and use its pricing to decide when/whether to sell.
Personally, I just look at market index pricing to decide whether to sell a big lot on a particular day, but I'm only at best picking up a beer per day for a month or so--at best.