I often hear from people, "I don't trade. I invest. I buy a mutual fund and I hold it". Mr. Investor, did you know you are trading on a regular basis? Are you aware that mutual fund managers are changing their positions by selling certain stocks and buying others?
Mutual funds must report quarterly what stocks they are holding. You can get those reports if you want them. I can't see where it will do you any good if you are going to blindly hang on to the fund.
A few professional traders will request these breakdowns only if a fund is greatly outperforming the market. They will see what stocks the fund manager has that is making this fund do so well and may buy those stocks. Very clever.
Did you notice that the investor is only looking at the best funds and not at the underperformers or the average performers? Now check your portfolio. Is what you own in the top most profitable funds for the past 3 or 6 months?
I know your broker told you that you have to look at the returns for the past 5 or 10 years. What nonsense. Do you care what the fund has averaged for the past 5 or 10 years or do you want to own one that is making money now?
Fund managers are constantly trading trying to increase the return for their investors. It is a shame most of them have not done a better job. They are always comparing themselves to the S&P500 index. When they do that well they think it is wonderful and they never stop bragging.
The S&P500 index is an average of the market. Mr. Fund Manager gets excited doing an average job. Does your boss like it when you are average? He expects more from you. And you should expect more than average from any investment you make especially if it is recommended by an "expert" broker or financial planner.
If anyone does an average job he will be employed until the boss finds someone who will do a better job and then Mr. Average can find the door. That should be the same way you examine the stocks and funds you own. The nonperformers should be sold and new ones found that will make money or go to cash. Don't rely on your broker. His company never wants you to sell.
Investors who buy for "the long haul" are long term traders. They are not knowledgeable enough to sell when the market is going down as it did in 2000. When there is nothing to invest in then cash is the best position you can have. Having your portfolio in cash in a one or two percent money market account will many times outperform owning stocks or mutual funds.
Everyone who invests is a trader. It is only the time period that is different.
Copyright 2005
Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.
Lincoln Stretch rentals Alsip ..Everything you invest in has risk so you want to... Read More
All stock trading and investing methods must deal with the... Read More
When will the stock market stop going down and start... Read More
I made my very first investment in the stock market... Read More
This is the continuing story of our two imaginary traders,... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
Question: How does it get better when it gets worse?Last... Read More
Over the past few months, several investment professionals have brought... Read More
Before we get into all the good news out there,... Read More
Wouldn't it be nice if you were only in the... Read More
Invest in the stock market for the RIGHT reason, using... Read More
For weeks, no, months we have been bombarded with nothing... Read More
There is a famous cliff on the ocean in Acapulco... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
To become a successful trader you must have some kind... Read More
Any online investor / trader seeks an excellent off or... Read More
One Saturday morning, while he was sitting at his computer... Read More
From the book 'The Stockopoly Plan' by the author Charles... Read More
Economists know more about how the fragments of society work... Read More
What! Me worry?Many of you remember the cover of MAD... Read More
In his wonderful book, 'Multiple Streams of Income', best selling... Read More
The date October 13, 2000 will forever be embedded in... Read More
Mutual funds were created with the idea that one person... Read More
Western Springs shuttle limo ..The gleam and bright lights of Wall Street lure in... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
What is leverage?Here is a definition of leverage from an... Read More
Sometimes the best way of lowering exposure to risk is... Read More
Every year I go to the Money Show in Orlando,... Read More
When we go to the circus we see a trapeze... Read More
When it comes to stock market trading it PAYS to... Read More
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More
What is the Series 7 Exam? If you... Read More
One of the most believed bits of conventional wisdom from... Read More
In one of my previous articles (Investing in the stock... Read More
It looks like we have now entered a new bull... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
One of the great truisms of Wall Street is "Don't... Read More
I have watched my cat play with a bag of... Read More
Every day I hear someone on CNBC proclaim that "this... Read More
If you're like many investors who squander those small dividend... Read More
Let's hope you did not have any of the Enron... Read More
Wall Street has been preaching for years and years to... Read More
When it comes to 401k's there is an overabundance of... Read More
The big bad bear is stirring again. So far he... Read More
Did you run out to buy that duct tape yet?... Read More
Everyone who follows the financial news has heard of mutual... Read More
There are so many kinds of work that needs to... Read More
Stocks & Mutual Fund |