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-   -   I need a pep talk (https://www.early-retirement.org/forums/f28/i-need-a-pep-talk-38789.html)

dwk 09-16-2008 07:34 PM

I need a pep talk
 
Haven't been on the board for sometime due to some significant life challenges. I would describe my risk/reward tolerance as moderate. Most of my retirement accounts are in my 401K and index funds. I'm 54 and was looking to retire in the next 3-5 years, but unless the market changes for the better, I'm going to change my target to 8 years.

My confidence in managing my finances has been bruised over the last 12 months. My total retirement portfolio has been on a steady decline since 3rd qtr 2007 and is down 12% over that period of time. I have some of my retirement funds with Smith Barney and met with my adviser recently.

My SB adviser and I discussed their TRAK/Wrap funds. We discussed the pros and cons. I'm considering moving 25% of my portfolio, the expense ratio is 1.5% total. My adviser and I have a similar attitude towards investing. He told me the TRAK accounts have been available for several years -- but he wanted to have some history with them before recommending them to clients.

Any comments greatly appreciated.

Thanks!!!
dwk

al_bundy 09-16-2008 07:37 PM

i'm a market timer, i think i might buy back in tomorrow

Sarah in SC 09-16-2008 07:40 PM

I know you know your situation better than I do, DWK, but I can't in good conscience recommend putting your portfolio in a SB wrap account charging 1.5%. There are just too many other places to put your money that are costing around 1% or better.

73ss454 09-16-2008 07:41 PM

I don't know what a trak fund is, with a 1.5% ER there's no reason to.

Why pay large ER's when you can go to Vanguard and get an advisor for free.

W2R 09-16-2008 07:53 PM

Quote:

Originally Posted by dwk (Post 715473)
Haven't been on the board for sometime due to some significant life challenges. I would describe my risk/reward tolerance as moderate. Most of my retirement accounts are in my 401K and index funds. I'm 54 and was looking to retire in the next 3-5 years, but unless the market changes for the better, I'm going to change my target to 8 years.

My confidence in managing my finances has been bruised over the last 12 months. My total retirement portfolio has been on a steady decline since 3rd qtr 2007 and is down 12% over that period of time. I have some of my retirement funds with Smith Barney and met with my adviser recently.

My SB adviser and I discussed their TRAK/Wrap funds. We discussed the pros and cons. I'm considering moving 25% of my portfolio, the expense ratio is 1.5% total. My adviser and I have a similar attitude towards investing. He told me the TRAK accounts have been available for several years -- but he wanted to have some history with them before recommending them to clients.

Any comments greatly appreciated.

Thanks!!!
dwk

1.5% sounds pretty steep to me, but then I am used to Vanguard.

I would question that your risk/reward tolerance is moderate, since you are considering making a major move due to the recent market difficulties. I think you should consider the possibility that your risk/reward tolerance is low.

You probably know the steps to take - - determine your asset allocation, make an investment plan, invest accordingly, and stick with your plan.

I have found the books on this list to be helpful for me: Investment Books

lazygood4nothinbum 09-16-2008 08:05 PM

i'm down about 30% & considering going back to work in a new career. feeling better now? always glad to be helpful. enjoy.

cute fuzzy bunny 09-16-2008 08:50 PM

Here's your pep talk: everyone is having a tough year, unless they're sitting in cash in which case they're going to have a whole lot of tough years.

Dont throw the baby out with the bathwater...saying "wow, after a single down market year I'm ready to throw 1/3 of my profits away to someone who will do no better at managing my money" is pretty close to "I'm bleeding a little, so I'm going to try throwing myself in front of a bus thats on the way to the hospital".

haha 09-16-2008 10:42 PM

Quote:

Originally Posted by dwk (Post 715473)
My confidence in managing my finances has been bruised over the last 12 months. My total retirement portfolio has been on a steady decline since 3rd qtr 2007 and is down 12% over that period of time. dwk

If I am not mistaken, this is a quite a bit better than the S&P. I think you have been doing fine. Are you getting pressure from wife or husband? This can be a valid reason to get outside management, just to have someone else as the lightning rod.

ha

Notmuchlonger 09-17-2008 02:20 AM

Win one for the Gipper.

rickier55 09-17-2008 03:22 AM

If you're only down 12% from the third qtr., then your not doing bad at all. If I were you I'd stick with what youre doing.

Rick

uncledrz 09-17-2008 05:37 AM

ok, I'll give you a pep talk....no actually just a few words, everyone who tracks the market is down some, depending on their allocation. But overall, over the past 35 or so years, lows are followed by higher highs. Will it all end? I don't know, but unless that happens, now is probably starting to be the time to get back in, rather than out.

Does that help?

militaryman 09-17-2008 05:45 AM

Ok I must have lost something but the old rule of thumb used to be that if you were close to retirement or in retirement then you make sure your market exposure is small enough that a market collapse will not effect your staying retired or projected retirement date. Seems like more and more on these threads are the stories saying "I was going to retire but my portfolio just lost 10% and now it looks like I can't" or similar.

Have I missed something? I mean I totally plan to be OUT of the market with my NEEDS $$ within 5 years of retirement.

W2R 09-17-2008 07:04 AM

Quote:

Originally Posted by militaryman (Post 715585)
Ok I must have lost something but the old rule of thumb used to be that if you were close to retirement or in retirement then you make sure your market exposure is small enough that a market collapse will not effect your staying retired or projected retirement date. Seems like more and more on these threads are the stories saying "I was going to retire but my portfolio just lost 10% and now it looks like I can't" or similar.

Have I missed something? I mean I totally plan to be OUT of the market with my NEEDS $$ within 5 years of retirement.

Right - - Naturally, some market exposure is necessary to deal with inflation in the long term. But for most of us this is long term money, and will not be needed for many, many years. So, while it is always a shock to see one's equities plummet, that shock can be tempered a little by knowing that one will be fine for many years and that markets go up as well as down.

When designing my ER strategies several years back, I assumed a worst case situation in the first years of retirement - - interest rates would be low, the market would be pretty bad, and inflation would be out of control. Actually, conditions are a lot better than that right now. I didn't foresee the housing crisis, but overall things could be worse. Next year I will retire and I am hopeful that the economy may be on better footing by that time.

dex 09-17-2008 07:17 AM

Quote:

Originally Posted by dwk (Post 715473)
looking to retire in the next 3-5 years, but unless the market changes for the better, I'm going to change my target to 8 years.

A 12% decline from close (not exactly) to the top equals to a 3-4 year delay. That doesn't feel right.
What multiple estimated retirement budget were your assets (Assets/budget) 12 months ago and now. That might help us understand and help.

Bestwifeever 09-17-2008 07:24 AM

Compare where you are now with where you were two years ago, not at the height. Or compare where you are now with the lowest your portfolio has ever been.

FinanceDude 09-17-2008 11:46 AM

Quote:

Originally Posted by dwk (Post 715473)
Haven't been on the board for sometime due to some significant life challenges. I would describe my risk/reward tolerance as moderate. Most of my retirement accounts are in my 401K and index funds. I'm 54 and was looking to retire in the next 3-5 years, but unless the market changes for the better, I'm going to change my target to 8 years.

My confidence in managing my finances has been bruised over the last 12 months. My total retirement portfolio has been on a steady decline since 3rd qtr 2007 and is down 12% over that period of time. I have some of my retirement funds with Smith Barney and met with my adviser recently.

My SB adviser and I discussed their TRAK/Wrap funds. We discussed the pros and cons. I'm considering moving 25% of my portfolio, the expense ratio is 1.5% total. My adviser and I have a similar attitude towards investing. He told me the TRAK accounts have been available for several years -- but he wanted to have some history with them before recommending them to clients.

Any comments greatly appreciated.

Thanks!!!
dwk

DON'T go into a wrap fee account. Those are money-makers for SB and I have yet to see a client do well in any "super duper hybrid can't miss" combo of those......:p

Talk to him about a diversified allocation of ETF's. I would be very interested in what he thinks about those, post his comments on here, if you would.......;)

ziggy29 09-17-2008 11:51 AM

Quote:

Originally Posted by Bestwifeever (Post 715643)
Compare where you are now with where you were two years ago, not at the height. Or compare where you are now with the lowest your portfolio has ever been.

The lowest my retirement portfolio has ever been is zero, as late as 1988 before I made my first 401K contribution. I guess that's one way to feel like we're coming out ahead.... ;D

MichaelB 09-17-2008 12:32 PM

I don't know if SB TRAK is the same it used to be, but I used Smith Barney TRAK when I first started investing - for my account and my kids college funds. I knew even less then than I know now...

It was a nightmare.

It's not about the fees they charge - which are unambiguously abusive.

It's the trading. TRAK trades monthly - constantly rebalancing - buying and selling. The tax impact alone was overwhelming .
My biggest problem, though, was that it didn't do as well as the first mutual fund I invested in - and that took me a whole day to research and select.

My advice - if the market has you down, choose a conservative Vanguard fund like Wellington or such - or one of their target funds. Any combo of Vanguard index funds - stock and bond - is bound to do better for you (but not for Smith Brney)

Michael

2B 09-17-2008 01:59 PM

I think you'll find most of this forum opt for low cost index mutual funds, a fixed asset allocation and do not use a financial adviser. Research shows that a FA just lowers you return leaving you with less to spend in retirement. Search the forum for "reading list" and educate yourself. Take control of your money.

As of 2 days ago I was down 11.1% for the year. Today will push that safely over 12%. However, I saved myself a bunch this year by sticking with a solid, reasonable asset allocation (60% equities/40% fixed). My "old self" would have been plowing cash into equities this whole drop.

We are in a good old fashion market panic. We have left the field of reason long ago. Solids assets are being valued at near zero and everyone fears there's more to come. This will pass away soon in my opinion. A more normal market will return but panics are part of a normal market.

Dawg52 09-17-2008 02:16 PM

Quote:

Originally Posted by 2B (Post 715904)
I This will pass away soon in my opinion. A more normal market will return

I sure hope your right. Not sure my liver will hold up to the abuse I'm giving it right now. :-\

Bestwifeever 09-17-2008 02:28 PM

Quote:

Originally Posted by ziggy29 (Post 715817)
The lowest my retirement portfolio has ever been is zero, as late as 1988 before I made my first 401K contribution. I guess that's one way to feel like we're coming out ahead.... ;D

See, don't you feel better already?

A854321 09-17-2008 02:47 PM

My experience with SB is that the 1.5% fee is assessed QUARTERLY. It doesn't sound like much, until you look at your statements.

In round numbers, and in a VERY basic example:

On a $1 million portfolio, SB takes $15,000 out every quarter, and lists it on a small line in the 6 page report. That means that every year you pay them $60,000!

Look at that from the perspective of being retired and realize you are paying $60,000 every year and it really starts to add up. That money comes out of your funds first.

20 years with SB Trak, and you have paid them in excess of $1.2 million!!!!

Rustward 09-17-2008 02:53 PM

Quote:

Originally Posted by A854321 (Post 715951)
My experience with SB is that the 1.5% fee is assessed QUARTERLY. It doesn't sound like much, until you look at your statements.

Are you sure that is quarterly? That is an enormous fee.
Could it have been 1.5% per year, assessed quarterly? Even that would be a lot.

2B 09-17-2008 02:59 PM

Quote:

Originally Posted by Rustward (Post 715954)
Are you sure that is quarterly? That is an enormous fee.
Could it have been 1.5% per year, assessed quarterly? Even that would be a lot.

I believe we've reached general agreement that no management fee is ever justified and that complicated financial products are best avoided.

Art G 09-17-2008 03:36 PM

I know many on here will advise index funds, however, I would instead advise finding funds that will hold cash. The mutual fund manager who is forced to be 100% invested will merely try to find the best of a bad situation. Instead, find a manager who can actively manage. JMO

2B 09-17-2008 04:50 PM

Quote:

Originally Posted by Art G (Post 715970)
I know many on here will advise index funds, however, I would instead advise finding funds that will hold cash. The mutual fund manager who is forced to be 100% invested will merely try to find the best of a bad situation. Instead, find a manager who can actively manage. JMO

Feel free to disagree with every research study ever done that says actively managed funds routinely underperform their index and none do it consistently. ;D

Hope springs eternal for that really smart guy or gal that can.

willowbeezer 09-17-2008 08:22 PM

Momentum is down on the indexes. we continue to get bad news from the financials / housing. Credit is tightening up increasing the cost of capital for financials and businesses. job market is challenged. and frankly, folks are coming home to see their portfolio decimated and some may call their brokers in the morning.

I am wondering if it makes sense to reallocate more to cash until the uncertainty subsides (no need to catch the bottom). My risk tolerance is moderate and in my opinion the riskiness of holding positions (ie. overnight/over the weekend / long term with an allocated portfolio) seems like too much risk for me (its not investing right now, its a roll of the dice). I've been 95% in cash since around June and missed much of the bloodbath - also been shorting the indexes intraday during the massive drubbings.

I've been lucky so far and am slightly up for the year, primarily by going to cash when the market momentum started to go down.

Perhaps I won't be in the market when this market turns but at this point, I am okay with that. I do believe in an allocation strategy but i just don't know if this is the right time.

With regards to the managed SB fund.. I don't know if I would pay 1.5% for the privilege of getting market returns which suck. I would also diversify my holdings and keep them in different accounts - don't put all your eggs in one basket - you just don't know which bank will get squeezed next.

Just my humble opinions.

Best of luck to all.

Art G 09-18-2008 12:11 PM

Quote:

Originally Posted by 2B (Post 715989)
Feel free to disagree with every research study ever done that says actively managed funds routinely underperform their index and none do it consistently. ;D

Hope springs eternal for that really smart guy or gal that can.

Soooooo, why not instead find those funds that HAVEN'T underperformed the index consistently? Just because your friends are jumping off the bridge, does that mean you have to?
Sorry, but I always find it silly for people to say, yeah, but they have outperformed 70% of the funds out there. It seems to me I've now got 30% of the funds in the world to investigate. JMO
BTW, American Funds do it consistently. Check your stats.

FinanceDude 09-18-2008 12:17 PM

Quote:

Originally Posted by A854321 (Post 715951)
My experience with SB is that the 1.5% fee is assessed QUARTERLY. It doesn't sound like much, until you look at your statements.

In round numbers, and in a VERY basic example:

On a $1 million portfolio, SB takes $15,000 out every quarter, and lists it on a small line in the 6 page report. That means that every year you pay them $60,000!

Look at that from the perspective of being retired and realize you are paying $60,000 every year and it really starts to add up. That money comes out of your funds first.

20 years with SB Trak, and you have paid them in excess of $1.2 million!!!!

Your are wrong. The 1.5% is assessed on an annual basis, but paid quarterly, so .375 or $3,750 is billed quarterly. Keep in mind that does NOT include the ER of the underlying funds that SB puts in there, so the REAL number is undoubtedly means you're paying in excess of 2% a year.

It's still way too much to pay, but I digress.........:D

FinanceDude 09-18-2008 12:19 PM

Quote:

Originally Posted by 2B (Post 715956)
I believe we've reached general agreement that no management fee is ever justified and that complicated financial products are best avoided.

VG charges management fees too...........so I guess you're 100% in cash..........making you smarter than Warren Buffet........;D;D;D

2B 09-18-2008 12:25 PM

Quote:

Originally Posted by Art G (Post 716417)
Soooooo, why not instead find those funds that HAVEN'T underperformed the index consistently? Just because your friends are jumping off the bridge, does that mean you have to?
Sorry, but I always find it silly for people to say, yeah, but they have outperformed 70% of the funds out there. It seems to me I've now got 30% of the funds in the world to investigate. JMO
BTW, American Funds do it consistently. Check your stats.

I just checked one. AMPCX is a large cap growth fund for the benefit of any readers. It failed miserably and I'm assuming that the numbers don't include the load.

1 Year 3 Year 5 Year Since Incep.
AMPCX -14.73% +1.09% +4.26% +2.57%
Category -9.28% +3.47% +6.05% --
Index -11.14% +3.66% +6.92% +10.78%
as of 8/31/2008

I could check the other 77 American funds. I'm sure I could find one or two that might have beaten their index consistently.

I think it's kind of silly for trolls to make incorrect statements and not have them checked. If you would like, post a list of the 78 funds and give 1 star for beating either the 1, 3 or 5 year performance of the index. You could make it even shorter if you'd post the ones that have beaten the 1, 3 and 5 year index performance (the 3 star funds). For these it would be nice to know if they also led the 10 year performance. These are the 4 star funds. Of course, subtract the load from the performance.

2B 09-18-2008 12:30 PM

Quote:

Originally Posted by FinanceDude (Post 716424)
VG charges management fees too...........so I guess you're 100% in cash..........making you smarter than Warren Buffet........;D;D;D

VG charges less than 0.3% on any of my funds. Most are under 0.1%. If I could get a lower cost index fund, I would. I'm stuck paying 0.6% in my 401k and it chaffes my butt.

Back in the old days, there wasn't a choice of low fee funds. The 1+% was the cost of being in the game. There's no reason to pay more than necessary. ;D;D;D;D

FinanceDude 09-18-2008 12:39 PM

Quote:

Originally Posted by 2B (Post 716434)
I just checked one. AMPCX is a large cap growth fund for the benefit of any readers. It failed miserably and I'm assuming that the numbers don't include the load.

1 Year 3 Year 5 Year Since Incep.
AMPCX -14.73% +1.09% +4.26% +2.57%
Category -9.28% +3.47% +6.05% --
Index -11.14% +3.66% +6.92% +10.78%
as of 8/31/2008

Which index are you picking? It needs to be large cap growth index if you want apples to apples...........:confused:

Art G 09-18-2008 12:41 PM

2B....interesting, you chose the C share version because....perhaps their fees were a tad higher?
It's not their best fund, but no matter....

AMCAP most recent I could find.....

1yr. -14.72
5yr 5.89
10 yr.5.58
lifetime 11.66

S&P Index

1 yr. -13.11
5 yr. 7.58
10 yr. 2.88

So, after 5 years, the Index never comes close. I appreciate you showing how stats can be manipulated when need be.

FinanceDude 09-18-2008 12:42 PM

Quote:

Originally Posted by 2B (Post 716437)
VG charges less than 0.3% on any of my funds. Most are under 0.1%. If I could get a lower cost index fund, I would. I'm stuck paying 0.6% in my 401k and it chaffes my butt.

PSSSTTT........ETF's..........;)

Art G 09-18-2008 12:44 PM

I doubt his 401k offers ETF's.

FinanceDude 09-18-2008 12:52 PM

Quote:

Originally Posted by Art G (Post 716452)
I doubt his 401k offers ETF's.

I was referring to lowering his VG expense. :D

2B 09-18-2008 01:35 PM

Quote:

Originally Posted by Art G (Post 716447)
2B....interesting, you chose the C share version because....perhaps their fees were a tad higher?
It's not their best fund, but no matter....

They were selected at random. I didn't want to take the first one on the list. I think I picked the third one. I didn't compare any fees or even look at a second fund. One loser was enough.

It's always hard to know which one will be the best fund over the next 10 year period.

It would be interesting to see a list of 4 star funds.

2B 09-18-2008 01:38 PM

Quote:

Originally Posted by FinanceDude (Post 716450)
PSSSTTT........ETF's..........;)

Some ETFs are too thinly traded and frequently have large bid/ask spreads. I have SPY and IWD.

My 401k is through Hartford and I have an S&P index fund with about a 0.6% fee.

Art G 09-18-2008 02:40 PM

Quote:

Originally Posted by 2B (Post 716498)
They were selected at random. I didn't want to take the first one on the list. I think I picked the third one. I didn't compare any fees or even look at a second fund. One loser was enough.

It's always hard to know which one will be the best fund over the next 10 year period.

It would be interesting to see a list of 4 star funds.

I believe FD has on several occasions listed how American Funds has performed vs. the S&P, and I'm pretty danged sure that every American Fund has beaten the index at worst over the last 10 years and most over the one, three, and five year time period. However, they don't have that many funds so you should check out their A funds, maybe 15 of them or so?

cute fuzzy bunny 09-18-2008 03:22 PM

4 Attachment(s)
Oh dear, I got tired of the pointless sand kicking so I pulled up four american funds I imagined people would be interested in as core portfolio elements and charted them against their vanguard equivalents, at least as far as I could ascertain. I'm sure I'll be told I picked the wrong ones, but if thats the case I'd ask whoever asserts my incorrectness will supply a corrected chart and the reason why the ones I picked were wrong...

Short answer is the vanguard version is as good or better over the last ten years, and I'm guessing since they arent actively managed, they have less turnover, fewer taxable events, and lower internal trading costs. Plus of course no loads and lower expenses. Since this time period includes two bull and two bear markets, and all sorts of other financial events, I'd imagine it'd be a great showcase for active vs passive management. What it says is that active management, by these allegedly superior examples, does one pretty much no good whatsoever.

I picked the american balanced vs vanguard balanced, american euro/pacific vs vanguard total international, american AMCAP vs vanguard total stock market, and both companies target retirement 2025 funds.

Voila:

harley 09-18-2008 03:31 PM

You're no fun. If you are going to ruin a good round of bitchiness with facts, we're just going to have to ask you to leave.

cute fuzzy bunny 09-18-2008 03:49 PM

:2funny:

Yeah, I'm a stick in the mud.

I'm sure I picked the wrong funds to compare, but american didnt seem to offer anything obviously clear like "US large cap value". Lots of multi-cap funds with options to purchase foreign stocks, bonds, popsicle stick collections, etc.

kitty_37 09-18-2008 07:51 PM

Re: TRAK
Don't do it. DH and I bought some with a windfall when young, and I have always regretted it.
Fees from constant rebalancing, throws capital gains, and it's a SB proprietary fund and can't be transfered out of SB without selling all. I felt stuck and eventually liquidated a bit at a time in order to get it out and stop the bleeding.

Go to Fidelity or Vanguard.

cute fuzzy bunny 09-19-2008 08:27 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716542)
I'm sure I'll be told I picked the wrong ones

But maybe not.

sailor 09-19-2008 08:37 AM

Quote:

Originally Posted by Art G (Post 716452)
I doubt his 401k offers ETF's.

Don't be too sure, for example mine does.
Administered through Schwab, in addition to 'plain vanilla' mutual funds also has something called Personal Choice Retirement Account and it's basically a brokerage account inside 401k.

Art G 09-19-2008 08:41 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716891)
But maybe not.


I'll let FD deal with this if he wants to. You make my head tired. Every statistic I have shows American Funds outperforming the indexes AND it has been posted on this board often enough that either you don't want to see it or......well you just don't want to see it.
BTW, they have some of the lowest expenses in the business, they trade very, very rarely as they have to go before a board and give good reason why they want to sell a stock before a year, and before they buy any company, they spend weeks on site. They also use a multi managed system so they're not tied to one manager.
Your charts are very pretty though, wrong, but very pretty. Sleep well knowing you're managed in a mutual fund by no one.:)

cute fuzzy bunny 09-19-2008 09:11 AM

Sorry about the actual facts. I havent seen a dang thing posted about American funds and their matching indexes comparative performance. If its been so exhaustively posted that you're bored with it, could you please point me to a thread?

I chose the highest returning funds with my best effort given their nebulous descriptions and paired them with boring broad indexes that seemed to match. Americans flagship multicap fund doesnt compare well with the boring old total stock market index. Its that simple.

I could see where there are places where I could have started the comparison to favor either fund...for example the AMCAP fund didnt take a big beating from the 2000-2001 downturn, but it performer poorly before and after that. So I could have cherry picked a "winning range".

I just took a straight ten year run full of bulls and bears. No chicanery. At most periods the funds were comparable and moved the same way at the same time.

Can you also explain why the charts are 'wrong' and offer an alternative chart? You are correct in one sense...these charts dont include the 5.75% front load the AMCAP fund charges at time of purchase. That'd make their numbers look even worse. My bad.

Oh, and by the way the turnover on AMCAP is 29%. Total stock market is 4%. So much for the 'rare trading'.

Marquette 09-19-2008 09:18 AM

4 Attachment(s)
Quote:

Originally Posted by Art G (Post 716897)
Every statistic I have shows American Funds outperforming the indexes AND it has been posted on this board often enough that either you don't want to see it or......

I recall a lot of discussions about American Funds but nothing ever compelling... either a statement that Bogle likes them too (but the latest statement I could find said that he didn't, with no other evidence to the contrary but FD's recollection that he must have at some point), or cries that people are picking the wrong funds to compare, etc etc etc.

Maybe you can tell me what I'm doing wrong, I went to Google and compared AMCPX against SPY since that seems to be what you're considering a comparable index (correct me if I'm wrong).

5 year:
Attachment 4684

The max it would let me compare:
Attachment 4685

Things look a bit better for AMCPX at Morningstar if you look at the full range:
Attachment 4687

But not the 4 year (the amount of time I've been investing)
Attachment 4686

So, instead of whatever it is you're doing, why don't you show off your stats too. I'd love to learn more, I'm pretty new to this stuff.

Art G 09-19-2008 09:39 AM

I've got books right in front of me, and in looking at EVERY A (all 15)share stock fund (including balanced and income) that they have, have outperformed the S&P over the last 10 years, and only AMCAP, Balanced fund and Washington Mutual have underperformed it slightly over the last five years. Over a one year period (as of the end of 2nd quarter) only AMCAP, New Economy, Smallcap World, and Washington Mutual have slightly underperformed the index.
They only have 15 funds that fall into the stock category, so bunny's claims of making it sound like they're fund loaded is wrong. They do have various share classes.
BTW, choosing AMCAP sure seems like cherry picking, seeing that it's their worst performer. However, it still wins out over a 10 year period by doubling the return of the S&P, so go figure.
Again, FD has posted actual statistics countless times, but it seems on this board, when shown facts, the topic just moves on elsewhere. I don't have the patience he possesses.
BTW, expense ratio on AMCAP is .65%. OUTRAGEOUS! And a turnover ratio of 29% is incredibly low for an actively managed fund, although they have some lower and some higher. Who wants a zero turnover?? You'd be better off with an ETF or UIT then.
One more note, over the fund life of AMCAP (5/1/67), it has earned 11.66% average annual rate of return vs. the S&P in the same time frame's 10.01%. If facts mean anything of course.

FinanceDude 09-19-2008 09:43 AM

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 09-19-2008 09:46 AM

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

FinanceDude 09-19-2008 09:48 AM

Quote:

Originally Posted by Art G (Post 716931)
;)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.......:p:D

Art G 09-19-2008 09:54 AM

Quote:

Originally Posted by FinanceDude (Post 716933)
It totally sucks having betas under 1.0 in my portfolio.......:p:D


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

Art G 09-19-2008 10:30 AM

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 09-19-2008 11:02 AM

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 09-19-2008 11:14 AM

1 Attachment(s)
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 09-19-2008 11:18 AM

1 Attachment(s)
Here's the 5 year chart. Same results.

cute fuzzy bunny 09-19-2008 11:19 AM

1 Attachment(s)
Three year chart, same results

Nords 09-19-2008 11:21 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716989)
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 09-19-2008 11:24 AM

1 Attachment(s)
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 09-19-2008 11:26 AM

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 09-19-2008 11:55 AM

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.

https://farm3.static.flickr.com/2052/...g?v=1198224070

Art G 09-19-2008 12:22 PM

Quote:

Originally Posted by cute fuzzy bunny (Post 716979)
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 09-19-2008 12:26 PM

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 09-19-2008 01:52 PM

Quote:

Originally Posted by Art G (Post 716926)
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 09-19-2008 03:09 PM

Quote:

Originally Posted by Art G (Post 717057)
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%.

Quote:

Originally Posted by Art G (Post 717051)
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.

Quote:

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?

Quote:

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.

Quote:

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.

Quote:

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 09-20-2008 09:16 AM

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 09-20-2008 09:32 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 717420)
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 09-20-2008 10:11 AM

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 09-20-2008 11:11 AM

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 09-20-2008 11:18 AM

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 09-20-2008 02:41 PM

Quote:

Originally Posted by Art G (Post 717051)
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 09-20-2008 03:40 PM

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 09-21-2008 12:12 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 717512)
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:
https://www.early-retirement.org/foru...pgx-33026.html
Quote:

Originally Posted by Art G (Post 611586)
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.


lhamo 09-21-2008 04:32 AM

Quote:

Originally Posted by utrecht (Post 717506)
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 .

Actually, I have posted here in the past about whether or not I should hang on to my American Funds (which I was forced to buy in a 403(b) managed by a "professional" who I found to know less about financial management than I did -- maybe he and Art G are related?) or roll everything over to Vanguard. The general advice I remember getting was that once you had paid the fees upfront, American Funds performance was generally pretty good so no need move things around.

Thank you cfb, for the detailed analysis. I will be reconsidering my options.

lhamo

2B 09-21-2008 06:36 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 717638)
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.

CFB,

I'm usually in favor of letting sleeping dogs lie, so to speak, but when trolls repeatedly spread false information it should become easy to immediately flip to a ready reference to quash it. Also, American funds need a slight bit of punishment truth prominently posted on this site as compensation for ArtG's actions.

You are more familiar than I am with how the search features work but could you make sure there is an easy way to find the American Funds performance comparison in the future? I think it would be worth it even if you posted your final comparison charts as a new thread.

cute fuzzy bunny 09-21-2008 10:38 AM

Hey, its entirely possible that theres something missing from the picture. Unfortunately the proponents of these funds arent providing any concrete information. Had Art provided the parameters around the numbers in his "book" I might have seen something to explain it.

On further analysis, it seems that many of these American funds have a value slant, many carry small cap stocks or international stocks/emerging markets, and they also tend to hold a fair amount of cash. Several also hold a lot of oil/energy stocks.

All good ideas to increase returns and dampen volatility.

Where I think it gets shady is when they compare that mix to the S&P 500. Large cap blend vs a mix of stocks of varying capitalizations, value tilt, small and foreign and emerging market. Definitely not apples to apples.

If they didnt nick you for the front end load and high expenses, the funds might actually be a good one-stop-shopping solution.

One can duplicate this by taking your money and splitting it into 10 parts. Buy 1 part money market/cd's, 4 parts TSM, 1 part TIM, 1 part small value, 1 part large value, 1 part international value and one part energy/oil stocks.

Another concern about American funds is that money has poured into them over the last few years. Theres definitely signs of serious fund bloat. The article below notes that Smallcap World only keeps 32% of its money in small stocks, vs 60% just a few years ago. I'd be a little disappointed if I wanted small caps and bought a fund with the word "smallcap" in its name, and ended up with less than a third of my money in small caps.

Money Magazine: Why success could spoil American Funds - August 1, 2006

The second link is a really interesting article talking about investing as a 'winners game' or 'losers game'. Its an older paper, but very well written and has some good data points.

Index funds vs active funds

FinanceDude 09-21-2008 06:51 PM

Quote:

Originally Posted by cute fuzzy bunny (Post 717460)
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?

What about breakpoints??

cute fuzzy bunny 09-21-2008 07:00 PM

Are you really sure you want me to get some of this on you? ;)

Sure, if you want to soak six figures into a particular fund you can drop the front end load to a couple of percent when buying a fund that underperforms a simple 3 or 4 component portfolio with no sales fees.

None of the charts above incorporate the front end loads.

I did read the prospectus' for the funds in question and they all do claim to have beaten the S&P 500 over ten years, but not for 5 years and barely for one year. But the numbers they stated dont jibe with other sources for s&p500 returns. Which isnt the index I'd compare many of these funds with anyhow.

Gone4Good 09-21-2008 07:03 PM

Sorry, still no dog in this fight, but don't Vanguard breakpoints start at $0?

cute fuzzy bunny 09-21-2008 07:05 PM

Yep, but the bastards dont start writing you checks at the $100k point like American does to its financial representatives. ;)

FinanceDude 09-21-2008 08:03 PM

Quote:

Originally Posted by cute fuzzy bunny (Post 718232)
Are you really sure you want me to get some of this on you? ;)

Hey, you're the one quoting 5.75% on everything, which is inaccurate..........:D

Quote:

But the numbers they stated dont jibe with other sources for s&p500 returns. Which isnt the index I'd compare many of these funds with anyhow.
It's not like you can fake a prospectus......;) Basically, Fido has a trillion dollars, American has a trillion dollars, and Vanguard has a trillion dollars in assets. In your eyes, there must be a lot of idiots out there for American to have a trillion dollars in assets..........;DAmerican Funds are not designed to "beat in index", never have. I would discuss on, but you aren't willing to have a logical discussion, so I will move on..........:D

FinanceDude 09-21-2008 08:05 PM

Quote:

Originally Posted by . . . Yrs to Go (Post 718233)
Sorry, still no dog in this fight, but don't Vanguard breakpoints start at $0?

I can duplicate an index fund with ETFs for less than what Vanguard charges for annual expenses, but that's another thread.......:D:D

mb 09-21-2008 08:21 PM

Quote:

Originally Posted by lhamo (Post 717842)
The general advice I remember getting was that once you had paid the fees upfront, American Funds performance was generally pretty good so no need move things around.

Thank you cfb, for the detailed analysis. I will be reconsidering my options.

lhamo

I think that is still the case but that just because they are good funds doesn't mean they will consistently beat the indexes.

Many years ago I had both some pre-tax and after-tax money at American but I ended up rolling it all over to Vanguard because I wasn't willing to put any new money into it and incur a load and it was a pain keeping track of many small accounts.

MB

slouch 09-21-2008 08:21 PM

Is it standard practice for investors to pay the full load price when working with an adviser? I honestly don't know, but I assumed that the 5.75% front end load was just the sticker price (e.g., the adviser could return the fees to the client based on whatever fee structure was put in place between the client and adviser). Am I way off base here?

FinanceDude 09-21-2008 09:44 PM

Quote:

Originally Posted by slouch (Post 718280)
Is it standard practice for investors to pay the full load price when working with an adviser? I honestly don't know, but I assumed that the 5.75% front end load was just the sticker price (e.g., the adviser could return the fees to the client based on whatever fee structure was put in place between the client and adviser). Am I way off base here?

There are different fee structures and share classes. However, a discussion of those won't happen on here..........:p

cute fuzzy bunny 09-21-2008 09:53 PM

Oh, I'm sorry, apparently you DO want some on you! :)

Quote:

Originally Posted by FinanceDude (Post 718270)
Hey, you're the one quoting 5.75% on everything, which is inaccurate..........:D

I'm sorry, I thought I just acknowledged otherwise. My bad. I said "If you want to throw massive amounts of money at funds that dont make as much money as cheap indexes, they wont sucker you for quite as much of a front end load"

Is that easier to read?

Quote:

It's not like you can fake a prospectus......;)
No, but you can pick your start and end dates judiciously, and decide what you do and dont include for costs and returns. That seems to be what happened. How unusual for an expensive fund full of front end loads to do some chicanery to get people to buy in!

Otherwise, go analyze what the #1 finance site did wrong and report back to us.

Quote:

American Funds are not designed to "beat in index", never have.
Thats a good thing. Because it appears that they dont. And with 5 minutes of 'work' on shaping a portfolio, which I'm most pleased to offer for way less than 5.75%, you can thoroughly beat these funds and not be a sucker.


Quote:

I would discuss on, but you aren't willing to have a logical discussion
Tell me where you got that? I offered some charts from a major financial web site, gave my opinion, and one proponent said he had "some books" that said otherwise, while you cut and ran. Offer me a logical discussion and I'll be glad to engage it. Point me at data, offer me facts. So far what I see is that American funds charge too much, return too little, and stray substantially from their investment targets.

Do note though that I have ten thousand notebooks full of why actively managed funds fail, and while I've been fairly nice about it up to this point, will gladly post those ad nauseum.

Quote:

so I will move on.
You were smart in the first place to divorce yourself from this loser of a discussion. I'm truly sorry you changed your mind.

For the rest of us, American funds underperform. Their primary proponent is a salesman who offers lame platitudes and then declares victory in the absence of confirming data. Their secondary proponent suggests that if you throw enough money at them, they wont soak you as badly on the entry to the poorly returning funds that he makes a ton of money from on referrals, and then suggests that you accept his livelihood without any supporting data because "he's done".

73ss454 09-21-2008 10:11 PM

I'm glad you're here CFB, it'll be interesting to see what they have to say about your info.

I paid these crazy commissions for many years with Oppenheimer as my advisor saw fit to line his pockets. Hey, buyer beware, I'm just glad I woke up though a bit late.

2B 09-22-2008 06:20 AM

Quote:

Originally Posted by FinanceDude (Post 718271)
I can duplicate an index fund with ETFs for less than what Vanguard charges for annual expenses, but that's another thread.......:D:D

I started to do that but I found that the ETFs for some of the subsets frequently traded with high bid/ask spreads. They also would go through periods of relative inactivity. It seemed only the hot ETFs would have a high volume and close spreads. For SPY that is always true. For the others, it depends.

FA industry exists because for two reasons. There's one group of people that find all this investment and finance stuff "too complicated" and they "need" help rather than learn to do it themselves. The other reason is that people believe (because they want to despite the studies showing it doesn't) that a "professional" can get a higher return than a diversified portfolio of index funds.

FinanceDude 09-22-2008 07:30 AM

Quote:

Originally Posted by 73ss454 (Post 718319)
I'm glad you're here CFB, it'll be interesting to see what they have to say about your info.

I paid these crazy commissions for many years with Oppenheimer as my advisor saw fit to line his pockets. Hey, buyer beware, I'm just glad I woke up though a bit late.

Oppenheimer's expense ratios are double or more than American.......;)

FinanceDude 09-22-2008 07:31 AM

Quote:

Originally Posted by 73ss454 (Post 718319)
I'm glad you're here CFB, it'll be interesting to see what they have to say about your info.

I paid these crazy commissions for many years with Oppenheimer as my advisor saw fit to line his pockets. Hey, buyer beware, I'm just glad I woke up though a bit late.

CFB is not looking for a discussion, but a fight...........:D

73ss454 09-22-2008 07:55 AM

Thanks for the reminder on Oppenheimer, another one of the stupid things I did in my life.

73ss454 09-22-2008 07:56 AM

Quote:

Originally Posted by FinanceDude (Post 718385)
CFB is not looking for a discussion, but a fight...........:D

Maybe, but he seems to have his ducks in a row, no.;D

FinanceDude 09-22-2008 08:07 AM

Quote:

Originally Posted by 73ss454 (Post 718397)
Maybe, but he seems to have his ducks in a row, no.;D

Well, he did compare the American Funds to the Vanguard TOTAL MARKET INDEX, and then complained that the American Funds compare themselves to the S&P 500? Morningstar and their brethren set up their software to have the S&P 500 Index as the "benchmark", so how is that American's or anyone else's fault? :D

There is no real pure index to compare American's portfolios to. They use a multicap strategy with a value bent. Their goal is not to beat the index, which should mean they should be out of business in the eyes of many on here, but they're not........;)

All I know is I have been invested in them for 15 years, have made plenty of money, and know I'm taking less risk than full market risk to do so. I have yet to have ONE client leave American to go somewhere else, Vanguard or otherwise. Mutual funds are a very small part of my business.......;)

Rant on.......;D

FinanceDude 09-22-2008 08:08 AM

Quote:

Originally Posted by 73ss454 (Post 718395)
Thanks for the reminder on Oppenheimer, another one of the stupid things I did in my life.

Don't feel bad. Oppenhiemer had some real "whiz kids" for a while, with big returns. Unfortunately to go with those returns, the managers in their value funds were buying stuff like Tyco and CMGI........:o:p

Bestwifeever 09-22-2008 08:46 AM

But FD, your clients choosing not to leave American Funds is not the same as documentation that those funds have outperformed corresponding index funds, which is what CFB is asking from you. That people choose to use FAs rather than manage their own finances is not the same as documentation.

IMO your profession is important for people who do not want to manage their own finances. I bet if asked to, you could explain to those people about how they could save $$ by not having a FA, and their eyes would glaze over and they would go to the next FA because they just don't want to do the work involved. They are paying you to do that work and I imagine (I don't know how you're compensated) the funds are paying you a commission too. Hey, good for you, no problem from me with that, it's just business.

73ss454 09-22-2008 08:53 AM

I would think that another good reason why American funds are still in business is because of brokers sending their clients money to them. A steady infusion of $ never hurts.

FinanceDude 09-22-2008 09:01 AM

Quote:

Originally Posted by Bestwifeever (Post 718426)
But FD, your clients choosing not to leave American Funds is not the same as documentation that those funds have outperformed corresponding index funds, which is what CFB is asking from you. That people choose to use FAs rather than manage their own finances is not the same as documentation.

I have never stated that American Funds outperform the index funds. What is irrefutable is that the risk they take is less than owning the entire market.......;)

Quote:

IMO your profession is important for people who do not want to manage their own finances. I bet if asked to, you could explain to those people about how they could save $$ by not having a FA, and their eyes would glaze over and they would go to the next FA because they just don't want to do the work involved. They are paying you to do that work and I imagine (I don't know how you're compensated) the funds are paying you a commission too. Hey, good for you, no problem from me with that, it's just business.
Like I said when I joined this forum over two years ago,I'm not on here to get new clients..........:D

I work on a fee basis, and buy and sell ETF's and stocks for my clients. I have very little mutual fund business...........

FinanceDude 09-22-2008 09:03 AM

Quote:

Originally Posted by 73ss454 (Post 718431)
I would think that another good reason why American funds are still in business is because of brokers sending their clients money to them. A steady infusion of $ never hurts.

Huge business in 401Ks is the real reason........;)


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