The bear market that showed up at the end of 2000 has every brokerage house-as well as the entire mutual fund industry-scrambling to find creative ways to boost both their image and bottom line. Unfortunately, this is often at the investors' expense.
Fund managers are ever on the lookout for ways to spin the stats to hide lousy track records and to find ways to obscure fees. To add insult to (financial) injury, investors end up being penalized for selling. So what's an investor to do? In this case, knowledge is power. Here are some of the ways mutual fund investors are being taken advantage of:
Keep in mind that mutual fund companies have market share in mind, not your best interest. If you think that might not be true, consider the skyrocket growth rate for pure technology funds. But look at them now: they've crashed & burned and no buy & holder has come out with a win.
Then there's the sad story of incompetence in the mutual fund industry. There are hordes of inexperienced financial planners (commissioned salesmen) just waiting to sell you load funds (A and B shares), or to recommend an asset allocation approach with no real plan or strategy that will serve you in a bear market.
Of course, there's always the option of having a perfectly balanced portfolio designed. Such was the case when a prospective client phoned me in 1999 during the height of the technology boom. He felt left out because everybody was making money in one of history's great bull markets, but his portfolio was so well balanced that he was neither making nor losing anything. He would have been better off in a money market account.
To me, the term balanced portfolio translates into this: I have no clue what I'm doing, where the major trend is, what I should be buying or whether I should be in the market in the first place. I'm hedging so much that one investment goes up and another goes down.
Balance is one thing and safety is really quite another. And mutual funds do not automatically mean either safety or balance. The key is always information-knowing how to get reliable info and what it means once you have it.
This is not for everyone. If you have money to invest and you don't have the time or the inclination to do the homework, then your smartest move is to find someone you trust. That would be someone with a track record you can verify, and someone who is not going to make money off your investment every time you buy or sell something.
People like this do exist, and the good news is you only need to do your homework once. That's when you check them out. From then on, you can relax knowing you're just not likely to fall prey to any of the rip-offs that are out there.
About The Author
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com; ulli@successful-investment.com
With an insecure job market, overworked employees, insufficient retirement savings... Read More
The stock market is very unstable at this time going... Read More
Time to look back2004 is over, now we are in... Read More
Since I can remember, and that's a long time ago,... Read More
Never lose money in the stock market again. Yeah, I... Read More
Sometimes the best way of lowering exposure to risk is... Read More
There are so many kinds of work that needs to... Read More
It is wonderful to be alive in the information age.... Read More
When the stock market is going up and all your... Read More
With the internet such a huge part of our daily... Read More
In 1960 an engineer working for a watch company in... Read More
Ever have one of those sample boxes of candy? Each... Read More
Has your broker been calling you recently with the "great... Read More
The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More
How many times have you said to yourself, "I'd like... Read More
The stock market often closes a week in the middle... Read More
When you stand on the ocean shore and watch the... Read More
From the book 'The Stockopoly Plan' by the author Charles... Read More
I am sure that if you have a brokerage account... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
The following are a list of nine things you want... Read More
Starbucks earnings are up again and so is their stock... Read More
Do you have a nest egg? You know, a place... Read More
Because you don't feel too sure about which stock or... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
After finding the price of a particular stock, usually the... Read More
You may have wondered why your mutual funds have been... Read More
As an investor you will want to check out any... Read More
Stock trading remains a very competitive field and the stock... Read More
If you're a normal human being, your need to feel... Read More
For weeks, no, months we have been bombarded with nothing... Read More
A PEG ratio cannot be used alone but is a... Read More
Many people would like to diversify their portfolios to expand... Read More
A 'stock option' is a contract between two parties giving... Read More
There are major differences between trading stocks and trading futures.... Read More
Four blind men were asked to give a description of... Read More
The fight continues to rage among traders who use technical... Read More
As I have said many times before in this column... Read More
We all know that emotions control every decision that an... Read More
Financial markets provide their participants with the most favorable conditions... Read More
Mutual funds were moderately successful in creating a presence in... Read More
Many people would like to diversify their portfolios to expand... Read More
What does it take to be a stock trader? It... Read More
After some forty years of banking and investments, I retired... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
Ever wondered what is a mutual fund? A mutual fund... Read More
It has fallen upon the consumer to make our economy... Read More
Analyzing growth stocks is an important focus for any investor.... Read More
I was devastated!I just couldn't believe it. I was 10... Read More
During the month of January the Dow Jones Industrial Average,... Read More
If you don't know what a Roth IRA is then... Read More
When we go to the circus we see a trapeze... Read More
Have you ever thought of investing? Do you have a... Read More
Both the stock market and oil prices rallied recently, which... Read More
When it comes to stock market trading it PAYS to... Read More
The Shadow knows. There used to be a radio program... Read More
Economists know more about how the fragments of society work... Read More
Did you know you can make money (and a lot... Read More
Money: the most charged word in the planet. It means... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
Every Wall Street analyst, financial planner and broker will tell... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Now where have I heard that before? I know. It... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
Where is the beef? Or maybe it should be where... Read More
As the man said, "I've got some good news and... Read More
Stocks & Mutual Fund |