Homie
Anti-Lefty
I don´t think they do. The market grows about 10% a year, whereas mutual funds usually grow by more than that.
Ask an Economist (Post #1005 and counting)
- Thread starter JerichoHill
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I don´t think they do. The market grows about 10% a year, whereas mutual funds usually grow by more than that.
Homie
Anti-Lefty
The best economic policy for any situation would be to lower spending, lower taxes (all, not just income), lower trade barriers, and limit the power of government. Like the 90s expression goes: Less is more!
Mise
isle of lucy
On average they grow by less than that, when you include fees. I'm not sure what they grow by exc. fees.
Homie
Anti-Lefty
Then why would anyone buy mutual funds? More risk and less reward? That makes no sense. Everybody would be buying index funds.
studies have shown time and time again that each year roughly 80% of mutual funds underperform the market, and furthermore, although every year some funds beat the market, the slim margin who do can basically be attributed to chance (since the 20% that beats the market each year changes)
woody60707
Deity
That kinda doesnt make sense. Why would they under preform at such a high rate? I have some USAA funds, and they always seemed to do good.
Mise
isle of lucy
The reason why mutuals underperform indexes is usually attributed to the Efficient Market Hypothesis. Also, there are a lot of bad mutuals -- I could start a mutual tomorrow, and I'm sure it would underperform the market, adding another mutual to the list of mutuals that underperform the index.
scy12
Deity
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I would like to recommend this site. http://www.pwc.com/ It has detailed evaluations of how the economy of each country one selects from the list fares.
Don't a lot of people who invest in mutuals do it because they are not sophisticated enough to do their own investing? And so they think they are hiring a pro manager to do it for them. However, it seems that a lot of those managers are working for themselves instead of the client/investors. That's why so many funds have complicated and hidden fee structures that eat into the profits before the client sees any gain.
Many mutual funds are purchased in 401k plans so investors don't have much choice.
Peter Lynch put it best when talking about investing...
"Spend at least as much time researching a stock as you would choosing a refrigerator". This applies to mutual fund managers as well. If a manager isn't in the top quartile (3, 5 and 10 yr) why own it?
Peter Lynch put it best when talking about investing...
"Spend at least as much time researching a stock as you would choosing a refrigerator". This applies to mutual fund managers as well. If a manager isn't in the top quartile (3, 5 and 10 yr) why own it?
if you don't believe me, do some reading of your own. most people don't know any better. index funds > mutual funds.
Mise
isle of lucy
I wonder if anyone can help me with this!
I need to know "typical" ratios for industries / sectors, so things like Gross Margin, RoC, RoE, RoA -- stuff like that.
Anyone know where I can find them? Google is less than forthcoming, but I'm REALLY bad at searching for stuff (I just don't know what to search for...). Would I be better off hitting the library for some Econ/Business/Mgmt books?
I need to know "typical" ratios for industries / sectors, so things like Gross Margin, RoC, RoE, RoA -- stuff like that.
Anyone know where I can find them? Google is less than forthcoming, but I'm REALLY bad at searching for stuff (I just don't know what to search for...). Would I be better off hitting the library for some Econ/Business/Mgmt books?
Godwynn
March to the Sea
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Mise
isle of lucy
Hmm... so if I wanted to know the ratios for each industry, I'd have to look up a company from each industry, and jot down the ratios? I was really hoping I wouldn't have to do that
. This ought to be a fun afternoon...Thanks though
JerichoHill
Bedrock of Knowledge
WRONG!
4/5ths of mutual funds fail to beat their respective index in any given year. And the distribution of the 1/5th that do change every year, its nearly impossible to pick a fund that will beat its index looking forward
Further, managed funds must beat the market PLUS their management fees (around %), just so the individual investor stays even.
Here's a good link: www.transparentinvesting.com
Why do folks buy managed funds?
Advertising.
Primerica bullsh*t.
Insurance Salesmen
Lack of knowledge about investing.
JerichoHill
Bedrock of Knowledge
We have 9 trillion in debt.
This isn't a hard question. Further, I don't see how raising taxes helps raise middle class spending power.
All businesses are assigned a GICS(global industry classification system)code. It's kind of like human DNA...
I would start here...
http://www.mscibarra.com/resources/pdfs/GICS_FAQ.pdf
http://140.123.21.10/ri/manual/globdata/Part3d.pdf
Homie
Anti-Lefty
Wow. Well, thanks to you JH and all the other ones (fishje and others). I am really surprised at this though, you would think that people who work with this stuff would have some skill in forecasting the economy. Also, you would think that word would get around quick enough, and the mutual funds would die out as a result of their poor performance.
Anyway, this makes my investing decisions easier. Not that I have to worry about it now (I have no money).
Homie
Anti-Lefty
Whomp, you might know this. How the heck do you buy index funds? Who do I call, what site do I visit? Is there any fees? Which index should I invest in? China, US, Norway?
BTW, I was in Chicago a few days ago. I know you do meetups with CFCers sometimes. I should´ve PMed you, but forgot. Huge city, so different from where I´m from and where I am currently at.
BTW, I was in Chicago a few days ago. I know you do meetups with CFCers sometimes. I should´ve PMed you, but forgot. Huge city, so different from where I´m from and where I am currently at.
Godwynn
March to the Sea
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You can setup accounts with online brokerages such as TD Ameritrade and E*Trade, or with the fund company itself like Vanguard.
Be careful for load funds. They will cut well into your returns. I myself just buy ETF's since they can be traded during the day and they have minimal fees.
I have made myself a list that you might be interested in:
SPY - S&P 500
QQQQ - NASDAQ 100
VWO - Vanguard Emerging Markets
VGK - European Markets
EFA - World ex. North America
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