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https://www.ft.com/content/fdbf6284-b724-11e2-841e-00144feabdc0The rationale for the concept had a degree of logic. A 130/30 fund combines a gross long position of 130 per cent with a short position of 30 per cent, meaning it still has the same 100 per cent net exposure to the market as a traditional long-only fund.
However, long-only managers can only underweight, not short, stocks they do not like. This leaves little room to generate outperformance from these stocks, particularly if they are say, only 0.1 per cent of the index.
If one uses shorting to time the market rather than to magnify the impact of stock picking skills, it's easy to get burned:"The problem came when many asset managers discovered they did not have the necessary skills to short,” says Amin Rajan, chief executive of Create Research, a consultancy. “It’s a very specialised skill. It’s more a psychological than academic discipline.”
https://www.baltimoresun.com/news/bs-xpm-2002-10-13-0210120267-story.htmlWhile some mainstream fund managers periodically have shorted stocks - Mario Gabelli of the Gabelli funds and CGM's Kenneth Heebner come to mind - most have shied away from it.
The late 1990s story of manager Jim Crabbe and his Crabbe-Huson Special fund illustrates why. Crabbe-Huson Special (eventually sold to Liberty Funds Distributors, now part of FleetBoston Financial) adopted shorting provisions in the mid-1990s to guard against a downturn. But Crabbe got bearish early, going short on technology stocks just as they rocketed to new heights. From 1995 through 1999, the fund lost more than 20 percent, while the Standard & Poor's 500 index was up roughly 200 percent; years of gains in the fund were wiped out.
Perhaps applying that quote to current stock market behavior makes some sense. Change the input variables enough and the history based models no longer provide a reliable guide.“As there is no previous occurrence of the event we’re experiencing in the local climatological record, it’s somewhat disconcerting to have no analogy to work with,” the National Weather Service’s Seattle office wrote in an area forecast discussion. “Temperature records will fall in impressive fashion.”
I think there is a bit of a balancing act here... It may be wage-related for some, but how about those living paycheck to paycheck (or close to it), but they still have iPhones, iPads, go out to eat and drink regularly, and basically just spend frivolously 100% of the time.... People still have to live within their means.Financial literacy... The world's most serious issue.
Not even close. See how folks in Portland are handling 115 degree weather today. Now Imagine ten or twenty degrees hotter in places that have no electricity. Imagine living for generations by a river that suddenly dries up or floods so badly your village is washed away. Or an ocean devoid of edible fish.
Also, financial literacy is pointless if employees aren’t paid enough wages to have anything left over to save at the end of the month. About half of America lives paycheck to paycheck. I know—“personal responsibility.” Let them live on top ramen and gruel.
Not even close. See how folks in Portland are handling 115 degree weather today. Now Imagine ten or twenty degrees hotter in places that have no electricity. Imagine living for generations by a river that suddenly dries up or floods so badly your village is washed away. Or an ocean devoid of edible fish.Financial literacy... The world's most serious issue.
I've found that the more expensive the lesson, the more likely one is to remember it in the future :-)I’ll continue to learn. Experience is a great teacher - but it can be expensive.
In its Brokerage Commission and Fee Schedule, Fidelity writes:Umm … Just to clarify … Fido doesn’t appear to call those “short term trading fees” when you sell a NTF fund early. In my case, they called them “deferred sales commissions.” So, on 2 of my NTF funds they force-sold (after the transfer of cash fizzled) the commission assessed was $100 each. (later reversed.) Reading their online lit, it appears that had I sold the funds online the commission would have been $50 each instead of $100.
A fund itself can charge a redemption fee to defray the costs to the fund associated with the redemption. The money goes back into the fund, so it's not a load or commission. The charge may be a short term redemption fee, such as Royce Fund's 30 day short term fees, or it may be charged unconditionally upon redemption, e.g. VIAAX.Short-term Trading Fees
Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds, funds redeemed through the Personal Withdrawal Service, or shares purchased through dividend reinvestment.
No Fidelity fund has a short term redemption fee.Fido’s Lit. makes clear that “first in / first out” does not apply if you sell one of their own funds inside of 30 days. What I’m not clear on is whether it simply goes down as a violation, or whether a fee is also attached.
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