buying stock I've got to write faster - the post below echos some of hank's and bee's thoughts. Nevertheless, I hope it adds some value.
circa33 is correct in so far as buying stock from another owner does not directly affect a company's coffers. But it affects a company in other ways.
While "small potatoes" like you and me can't move a company, large investors
buying stock can. This is why it's worth paying attention to how your mutual fund companies vote their proxies. You're buying stock not only as an individual but as part of a group of fund shareholders.
In theory, if enough people sell a stock in unison, its price will be depressed. A company will have a harder time raising more cash with secondary offerings. Lenders may scrutinize a company's business prospects more closely, making it harder for a company to borrow cash.
Realistically though, it's very hard to move stock prices this way and the direct economic impact on companies is likely small. The larger impact is on reputation and good will.
Here's a New Yorker column somewhat supporting circa33's viewpoint, that "There is an important difference between divestment and product boycotts. "
https://www.newyorker.com/business/currency/does-divestment-workOne of the best case studies for how effective divestment may be the movement targeting apartheid South Africa in the 70s and 80s. To what extent direct economic pressure had an effect isn't clear. The indirect effect, of creating political action is indisputable.
Here's one column concluding that "but the actions of U.S. investors gave the [anti-apartheid] movement both visibility and legitimacy and had a decisive economic impact."
http://articles.chicagotribune.com/2013-12-15/business/ct-biz-1215-outside-opinion-20131215_1_sullivan-principles-south-africa-outside-opinion
buying stock Nothing wrong with the question from
@circa33...hope Crash's comments doesn't chase you away from MFO.
@hank comments reminds me of the up-swell of divesting pressure college students put on college endowments in the early
1960"s with regard to South African investments and the anti-apartheid movement.
Social change can be brought about by paying attention to ethical investments. May not be an exacting science, but worthy of our humanness.
aamarchives.org/Investment may seem agnostic, but investors often are not.
buying stock
Larry Swedroe: What Investors Should Worry About Thanks
@MikeM2,
I’ve never been a fan of alt funds. Seems to me that about a dozen or more years ago the SEC began requiring these L/S funds to include the interest paid on money borrowed to hold short positions to be reflected in their published ER. That resulted in much higher published ERs for these guys. I’d guess that the
1.07% figure is pretty typical.
Despite misgivings re the class of funds, I recently put some money into Oppenheimer’s QVOPX only after (
1) reading the fund reports for a couple years to get a sense of how Michelle Borre runs the fund and thinks, (2) becoming
really concerned about valuation of most risk assets, and (3) socking away about as much cash as I care to. I will note that QVOPX has a total ER just north of 2%. - certainly a lot less than the fund you listed above. (And, I have some load-waived money at that house.)
4.18%? Outrageous!
The fund has had a really unimpressive record for several years, and so I’m not recommending it (or any alts). One thing about Oppenheimer that troubles me is their funds seem more highly dependent on individual managers than most other companies. So, I’d be loath to stick with this fund if manager were to leave. Last time I checked, it was having a decent year compared to another conservative hybrid I own (and benchmark against), TRRIX.
Larry Swedroe: What Investors Should Worry About Nevermind, I just found the expenses etc. I just threw up in my mouth. It makes AQR funds and PCI/PDI look like a bargain.
LENDX
Annual Fund Operating Expenses
(as a percentage of net assets attributable to the Shares)
Management Fees ............................................................... 1.50%
Interest Payments on Borrowed Funds(1) ............................................. 1.07%
Service Fees ................................................................... 0.10%
Other Expenses(2)
Loan Servicing Fees ......................................................... 0.82%
All Other Expenses .......................................................... 0.95%
Total Other Expenses ............................................................ 1.77%
Acquired Fund Fees and Expenses .................................................. 0.01%
Total Annual Fund Operating Expenses .............................................. 4.45%
(Fee Waiver and/or Expense Reimbursement)/Recoupment(3) ............................. (0.27)%
Total Annual Fund Operating Expenses After (Fee Waiver/Expense Reimbursement)/
Recoupment ................................................................... 4.18%
Private Equity: Overvalued And Overrated? Hi
@bee,
Actually, no I have not given much thought to buying stocks in the companies the fund holds. The turnover for the fund is listed at about 30%. So, in holding an average of 32 positions means they sell on average about ten positions per year and buy about ten more. This, thus far has created a good income stream in the form of fund distributions from their profits. In another year or so with the payouts I have received and anticipate receiving if the fund share price went to zero I would not have lost capital as I will have received in payouts a sum equal to what I have invested. That amounts to a distribution roll of eight to ten years. You want find that in real estate.
For me, based on my cost basis and distribution roll for Income Fund of America was
12 years to recoop my capital and for Franklin Income Fund it was about thirteen years. Folks, for what these funds have paid out if their value went to zero I'd be well ahead based upon the number of years I have owned them.
So ... How can I go wrong with that?
Private Equity: Overvalued And Overrated? Hi
@Mark,
Actually my annual payout including dividends, interest and capital gains distributions has averaged since I have owned the fund
12.9% based upon my cost basis. My total return per share has an averaged annual return of
15.4%. In addition, I am finding that the pent up unrealized capital gains within the fund are just under 20%. So if you buy now you'll be buying your distribution, so-to-speak.
That's one of the reasons I have been building cash for the past couple years. Stock are currently richly priced by my standards. And, if you pay too much your returns will be thin. That's one of the reasons I like to buy the downdrafts. While the weak investors are selling I'm putting my buying britches on as I did when I purchased this fund.
Thus far my buying strategy has worked well for me.
