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JMacDonald

Unhappy Ing Client At M*

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Dan,

 

Thank you for your well written post,

 

"IRA, just imagine an agent, whom we will call "French Teacher" and he doesn't have many friends but does have clients who he overcharges for many years because they believe his rap about annuities...he knows what he is doing, in fact he is very proud to make his money that way because if he didn't "someone else would". Then he finds a friend, we could just call him "TR1982". They are friends because they like the idea of supporting the financial institutions as loyal fans, truly believing that giving them money to invest and paying through the nose somehow makes them part of what makes America and capitalism great. The moral of the story: it is great to have friends. Dan "

 

....but I think that it may be more than lonely people looking for friends. I'm thinking in the way of an international conspiracy of lonely people looking for friends. For example, think of an international (sales) Agent, , from France, who is so desparate for a friend that he is willing to infiltrate this local population. He might call himself, "french TEACHER" instead of "french AGENT". Anyway there may be a local of this international group who he found to be his friend, and then they do their best to distort and confuse so they could gain capital to finance their international trips to find more friends , and think that if they pesist in repeating distortions over and over again someone will believe them. I guess the moral of this part of the story is that, some travel great distances to have friends...........tra.

 

 

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Mr F.

 

I'm not so sure. Let's see if you can pass this test.

 

Do you drink FRENCH wines?

Do you eat FRENCH toast?

How do you put ketchup on your FRENCH fried potatoes?

Do you teach FRENCH?

Do you like to FRENCH kiss?

DO people speak FRENCH in FRANCE?

How many 403b's need to be sold to fund a trip to FRANCE?

 

 

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FT

 

You had mentioned that you are interested in discussing and perhaps investing in individual stocks. At the Moringstar site there is a discussion group called stock picks..............I've read that for those who think they can outsmart the market, assign less than 10 percent of your assets that you are willing to loss to this purpose (because you will be competing with professional managers for the most part)......good luck........Ira

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FT

 

You had mentioned that you are interested in discussing and perhaps investing in individual stocks. At the Moringstar site there is a discussion group called stock picks..............I've read that for those who think they can outsmart the market, assign less than 10 percent of your assets that you are willing to loss to this purpose (because you will be competing with professional managers for the most part)......good luck........Ira

 

I may look into that...thanks.

 

(For what it's worth, I'm puzzled by the notion that an individual stock purchase constitutes the establishment of a "competition" with managers, who have a manyfold advantage over little ol' me when it comes to investable assets. Anyway, I'm not smart enough (nor do I have enough time on my hands, most days) to attempt to build an entire portfolio in an effort to beat the mutual funds that are available to me for a small price.)

 

Upon further consideration...I guess strictly speaking, it IS a statement that you can beat the market anytime you buy anything other than an index fund.

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I glanced at the discussion group, and some of the topics looked like they would be interesting to read.

 

I agree that it would take a lot of time to set up a portfolio with stocks. In addition, have a diversified portfolio of stock would be very difficult because of cost for small investors like us to build a portfolio.

 

The majority of stock purchases now adays are made by institutional investors, who can afford the best research and analysis which are not available to us. We would be buying or selling to these sophisticated investors, who would have an advantage over us..

Your right, it is my position that since professional managers buy and sell from each other, an index fund bought at a low price, would give slightly better results than active funds that incurr these expenses.

But, if a person has a inclination, which many of us do, and funds do not give evough excitment, a small porportion of ones assets can be use to buy and sell stock. But, keep the bulk of your investment in funds that will accomplish your goal.

 

Ira

 

 

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Guest Sierra

 

However, there have been some funds that have done well over the past five years: Mid-Cap Index-- +9.02%; Small-Cap Value Index-- +14.29%; and the REIT Index-- +19.62%. I have these funds in my tax-deferred accounts. Maybe James' agent didn't have him in a diversified portfolio.

 

Also I would say that my portfolio would have suffered from those high fees that go with VAs. I feel fortunate that I learned to do it myself and didn't have to suffer the advice of an agent. Best Wishes.

 

 

 

Joe, how would you feel if it had been an agent that led you to the funds you listed here? In a market which has drifted downward over five years, would you not think the agent had done his/her job successfully if (s)he had shown you funds that returned 8.02%, 13.29% and 18.62% to you, after a 1% fee that (s)he had earned?

FT: The market has hardly drifted downward over the last five years! From January 2000 to March 2003 the SP 500 was down about 50 percent. Since March 2003 the SP 500 is up about 50 percent.

 

Joel

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The sales agent, who had no particular skill in picking funds, gets paid whether the fund goes up or down. This year is and example, say the marke stayed even during the first six months--the sales agent gets one half percent putting the client at a loss. The sales agent gets 5 percent load the first year plus 1 percent, plus 12b-1 fee, etc every year. Of course the sales rep has expenses, gas money to the school, buying coffee in the school cafeteria while looking for clients.

 

I'm sure that TR , Mr. French and other sales agents will have something to say, maybe to agree(ha, Ha)

 

Ira

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Funds as a group that are sold by sales advisors(load funds) do not perform as well as no load funds. All of the load funds by definition have sales advisors while no load funds do not. What does this indicate:

 

expenses are higher in load funds which are prohibitive to performance

 

advisors as a group have little or no added value to the performance of funds.

 

all of the above

 

What action is indicated?

 

do not buy load funds; buy no load funds--lower cost no load funds even better.

 

Suggested reading -- Common sense on mutual funds. J. Boogle

 

Ira

 

 

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Guest TR1982

Ira,

Why do you continue to propagate information for which you have no facts to support?

 

"expenses are higher in load funds which are prohibitive to performance

 

advisors as a group have little or no added value to the performance of funds.

 

all of the above"

 

Can you provide one piece of industry or academic research that supports those statements?

 

I'm waiting.

 

In the meantime:

 

No load investors by definition have 2 common traits.

Fact:

1) They think they are smarter than everyone else.

2) They think because they don't pay a sales charge that their investment performs better.

 

What research do I have to back this up? None. But I'm here and I can say whatever I want: therefore, it must be true.:)

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However, there have been some funds that have done well over the past five years: Mid-Cap Index-- +9.02%; Small-Cap Value Index-- +14.29%; and the REIT Index-- +19.62%. I have these funds in my tax-deferred accounts. Maybe James' agent didn't have him in a diversified portfolio.

 

Also I would say that my portfolio would have suffered from those high fees that go with VAs. I feel fortunate that I learned to do it myself and didn't have to suffer the advice of an agent. Best Wishes.

 

 

 

Joe, how would you feel if it had been an agent that led you to the funds you listed here? In a market which has drifted downward over five years, would you not think the agent had done his/her job successfully if (s)he had shown you funds that returned 8.02%, 13.29% and 18.62% to you, after a 1% fee that (s)he had earned?

FT: The market has hardly drifted downward over the last five years! From January 2000 to March 2003 the SP 500 was down about 50 percent. Since March 2003 the SP 500 is up about 50 percent.

 

 

 

Which still leaves it quite a bit DOWN from where it was at the beginning of 2000, no?

 

The question I asked was not to debate whether the market's movement over the past five years constituted a "drift" or a "bell curve" or anything else. It was to ask a simple question: in a five-year period where the overall market direction has been negative from beginning to end, would not an advisor who had recommended the funds that Joe listed have earned his commission?

 

It's a hypothetical question, with a pretty simple answer. Market down + my funds up = advisor good.

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Hi,

FT, you asked "would not an advisor who had recommended the funds that Joe listed have earned his commission?"

 

Yes, the people who recommended those funds to me did earn their commission. I bought their books.

 

They are John Bogle, Larry Swedroe, Willian Bernstein, Frank Armstrong, Rick Ferri, Bill Schultheis, Charles Ellis, and even Charles Schwab. I can thank them for keeping me about water when the market dived, and allowing me to take advantage of the big run up two years ago. These guys are the best! Best Wishes.

 

Joe

 

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Hi,

FT, you asked "would not an advisor who had recommended the funds that Joe listed have earned his commission?"

 

Yes, the people who recommended those funds to me did earn their commission. I bought their books.

 

They are John Bogle, Larry Swedroe, Willian Bernstein, Frank Armstrong, Rick Ferri, Bill Schultheis, Charles Ellis, and even Charles Schwab. I can thank them for keeping me about water when the market dived, and allowing me to take advantage of the big run up two years ago. These guys are the best! Best Wishes.

 

Joe

 

Wow. Eight books, $20 a pop, say...do you have any IDEA what that $160 would have grown to, if invested rather than spent on books???

 

:-)

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I read the same books. The public library does not charge to read these books. Eventhough the library has computers, I invested the money I saved on a home computer, so I can contact you more regularly.

 

Ira

 

 

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