This two-part series by Bryant Urstadt is some of the best investing writing I’ve ever read. Bryant gives a run down of exactly what-the-f happened this Summer 2007. After reading these two pieces, "it all makes sense, man". Part 1: The Blow Up Teaser: On Wednesday, August 8, not long after the markets closed, 200 (more…)
Many of you will have read about the advantages of Exchange Traded Funds over Mutual Funds. However, have you considered beyond the “ETF” moniker to ask: “What ETF index should I be looking for”?
To start with, let’s quickly examine the basics of ETFs. These are generalities, but tend to hold true.
Exchange Traded Funds are managed such that the asset allocation of the fund matches the underlying index the fund is attempting to emulate. The indexes range from well known (e.g. S&P500) to obscure, created specifically for the ETF (e.g. water focused). Management fees are generally less than 0.5%, but can be higher for specialized funds. ETFs trade daily on the stock exchange and can trade at a premium or discount to the underlying assets. Through fancy footwork, ETFs generally retain profits within the fund and make only small distributions each year.
I receive the Swiss Stocks magazine and something in Stocks caught my attention. An author said that the funds are going to be the problem spot once the market retraces. I did not quite understand his thinking so I kept reading. The essence of the problem is that funds are buying stocks and driving prices (more…)
Kimber made a post about why Mutual Funds Aren’t for Losers, which was a good article and I see her point of view, however, in this case, I thought I would show the other side of Mutual Funds, which, in my opinion, suck to the point where vacuums should be named after them, or maybe they could rename the Chicago Cubs the Chicago Mutual Funds.
A buddy quoted Robert Kiyosaki of Rich Dad fame to me a few days back, saying “Mutual Funds Are For Losers.”
(This same buddy invests in index funds which are technically mutual funds but that is an entire other post.)
Well, chock me up as a loser because I do hold mutual funds, both now and in the past.
I know my writing often sounds like I’m preaching for everybody to be value investors. That’s simply not true! I only feel that some people can be value investors due to the temperament and the time needed to perform analysis. So what do I tell the general public who couldn’t care less about reading financial statements, or sitting in front of the computer day-trading?
Mutual funds are still the no-brainer solution for the average joe. Much “marketing” debate has been made about management fees. They’re not wrong to be critical but everything is really dependent on the “net” returns you’re able to achieve. My only concern is that consumers do the minimum work of researching the track-record of the fund and the fund manager. A long, consistent and positive tracking record is a must for active-managed funds.
But when John Bogle, founder of Vanguard, decided to balk the norms of the financial industry and aggressively market passive index funds, it was a strong indictment on the vast majority of managers who fail to beat their corresponding benchmark indexes. Vanguard’s promotion of this strategy still trumpets strongly, but there are signs of shifting towards actively managing their index funds, even if it’s just a little bit!
Devaluation of currency is not uncommon in other countries, but so far has been moderate in the U.S (in part because the dollar is the world’s currency). I recently discussed this in an article titled Speculating on the Future of the Dollar. But given our massive debt, budget deficit and trade deficit, a significant drop of the dollar against other world currencies (and corresponding increase in inflation as all types of imports become more expensive) becomes a possibility.
How can you protect your portfolio from a significant slide in the dollar?
I was recently disappointed because I couldn’t purchase the Mairs & Power Growth Fund (MPGFX) or Artisan International Fund (ARTIX) through my T. Rowe Price Roth IRA. After doing some sleuthing on Morningstar I discovered I could purchase both of these funds through TD Ameritrade, from whom I have a standard brokerage account.
I was ready to transfer all my assets over from TRP to TD Ameritrade and it turned out that transferring a Roth IRA was extremely bothersome. So instead of jumping into anything I thought I had better check to see if there was another discount broker that offered more funds, because I didn’t want to have to do this again. I spent some time at it, and put together a screen using the Morningstar Premium Fund Screener (more info) that would show the number of funds each major discount broker had available, and which funds were covered by all of them. The results were fascinating.
Becoming wealthy is a full-time job. Successful entrepreneurs have worked for years to build a deep knowledge base in areas as diverse as sales, marketing, accounting, stock investing, real estate investing, leadership, team building and personal finance. For someone who is still laying his foundation, finding a mentor can help him avoid potholes he otherwise would not have seen, and is an invaluable asset as both a friend and a counselor.
A mentor is someone who has already done what you have set out to do. Whether that means becoming a successful stock investor, or real estate mogul, your mentor is an expert and is willing to share his experiences. Just as professional baseball players have pitching coaches and managers have leadership coaches, so should budding entrepreneurs have a mentor that can help steer them down the right path.
In Part 1 of this article, we looked at how to use the Morningstar Premium Fund Screener, and I showed you two screens I use to select top funds for my portfolio. This article will move on from the screening phase of the stock screening process to the analysis phase, where we actually choose the candidates for possible investment. The key to successful analysis is understanding how to read the results views provided by the screener. In addition to the basic views provided by Morningstar, the premium screener also allows you to create up to two additional views. By creating custom views that package your most important statistics together, decision making can be more rapid and accurate.
