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IBD's Advice On Mutual Funds: Don't Trade; Hold For Long Run
This would be my answer to my post if one should be buying funds at the top of the market. Art
"The Best Time To Buy A Fund Timing is also different with mutual funds. While IBD-style investors try to stay in sync with the general market when buying stocks, any time is the best time to invest in a mutual fund."
I agree 100% with IBD about investing in mutual funds for the long term.
Cost Basis $20,000.00 Prior Close 03/19/2013 Total Value $59,081.52
This is an account that I started with 20,000 dollars in 1996. It was invested in five different Fidelity funds, experienced two major bear markets, and never had any new money added, etc. I guess it could have done better..but it could have done much worse - if I would have tinkered too much.
Reply to @perpetual_Bull: hello. thanks for info. Is ~60k after all the taxations/ annual fees, etc... ??? Gold was about 350s dollars/ounce back in 96 but now ~ > 1500 dollars... gas also < 1 dollar/gallon but now ~ 4 bucks/gallon hmmm...just make me wonder if stock investing is the 'GOLD STANDARD' for long term
That money is invested inside an annuity - no tax until withdrawn - high fees - poor selection of mutual funds - etc. In recent years they've began to provide a much better selection of mutual funds ( Franklin Templeton Global Bond, BlackRock Global Allocation, etc ) still with higher overall fees.
Keep in mind that Gas & Gold have had one heck of a run. The overall stock market is at about the same place it was many years ago. Still...the compounding effect works over the long term.
I am a big believer in the compound effect and that the greatest wealth creating tool is the tax free compounding of one's capital over time. However, had I not been an active (very active) trader of mutual funds, especially in the late 80s and 90s when my account was much smaller, I would be looking at a very bleak retirement as I would have a much, much smaller nest egg.
Being an active trader with mutual funds has cost many investors dearly. For example, investors piled out of FPACX in droves during the high tech boom. Then when high tech crashed those investors that remained faithful to their original thesis ( value-oriented investing over the long term ) were rewarded. What about those that chased stocks selling at 200 times forward earnings? Not so much.
And didn't people call for Donald yacktman's job several years ago? Talk about people with egg on their face.
I'm not advocating staying with poor managers and their underperforming funds... but...When the story remains the same ( same manager, same investing philosophy ) investors should stay put, imo. I think the disparity between mutual fund returns and investor returns make that case.
Reply to @perpetual_Bull: I opened up an IRA account in April 1993 (Dow around 3400) with $2000 and a SEP IRA in April 1994. Total contributions to date $76,515 with a distribution (withdrawal) of $902.28 in April 1997 and a distribution of $6000 in January 2009. Total value this morning (including monthly accumulated dividends) $1,370,072. My taxable account has a better return but it would be impossible to figure out because of the constant withdrawals over the years as that account is used for living expenses, capital purchases ala homes, automobiles, etc.
Glad I never paid any heed to the efficient market gurus and the buy and hold crowd like John Bogle. There is a big advantage to being a small fry trader as opposed to a large hedge, mutual, or pension funds, especially if you are willing to live and breathe the markets 24 hours a day - a sacrifice few are willing to make.
Reply to @Hiyield007: That is very impressive. I have a similar philosophy, but tend to divide my portfolio in B&H for taxable and trading (not day-trading, usually hold positions for several months) in tax-sheltered. I use ETF upgrading based on momentum (my own combination of qualitative and quantitative factors, but purely based on price/returns). Generally look at M*, etfreplay.com, stockcharts to look at returns, moving averages and trend lines. Don't like to use any more complicated signals. Can you please share your trading philospophy in general?
Reply to @Hiyield007: thanks for the info. Can you list me in your living wills [LOL]. kidding aside...Over the past 20s - 30 yrs, in your own experiences, would you prefer to use more bonds than stocks w/ long term investments or do you feel we need mixtures of both? Sounds like you did get very good return over the past 20s ++ yrs
We must remember that 99.99% of investors don't study the markets 24 hours a day.
Over the last ten years I've paid off my house, purchased cars, gave away thousands to an ex whatever she calls herself nowadays, etc -- and I'm still well ahead of the market averages with those expenditures included. How ? Well selected mutual funds.
Before that my former broker secured a capital loss of 100,000+ with several bone head moves. That was when I became a self directed investor and started trading myself. When I finally got back to even -- for the sake of my blood pressure -- I stopped trading. Also, I enjoy my free time out fishing better than reading charts. Constant living & breathing the market can pay off...but at what price? Some of us make it part of our daily ritual.. some just don't care.. I know i've found my own happy medium
Bottom line:
I still believe this article by IBD holds true for 99.99% of the general public. While my tiny winnie annuity contract doesn't come close to any 1,370,072 Donald Trump account -- It has caught a triple -- when the alternatives are factored in -- isn't that bad.
I congratulate you on your investment success & hope it continues.
Reply to @Kaspa: It's the essense of simplicity and based on trend persistency and pure price action devoid of all the indicators and oscillators so favored by the technicians. I don't believe in predicting/forecasting just following price and only price. If it isn't going up, move on. I should add I have about 400 trading books and most were written by academics who couldn't trade their way out of a paper bag. On the other hand I have some 20 books about the application of success principles/goal attainment and they are worth their weight in goal. Successful trading/investing, at least for me, has about nothing to do with an analytical mind or intelligence but applying common sense business principles to your trading endeavors. It also has a lot to do with how you handle the lucky breaks that come into your life as an investor/trader.
Reply to @perpetual_Bull: My point was, I would probably be a 66 year old bag boy at my local grocery store had I heeded the conventional wisdom of the John Bogles of the world when I was younger. Namely, the best you can do is surrender and just mimic the indexes by being a passive and somulent investor.
I just happen to believe that if you are someone like myself with limited skills, abilities, and intelligence, that the only way to achieve one's financial goals is by a 110% total commitment to the process. One of my favorite books, Secrets of the Millionaire Mind (T. Harv Eker) covered this topic extensively. I wish that book had been published long, long, ago when I was a struggling trader for more years than I care to remember.
Even if you factor in my taxable account to the IRAs you referenced, I am by no means rich but simply a small-time, Average Joe Trader who over the years happened to be at the right places at the right times and took the required actions. I would much rather be lucky than smart.
Oh yes, my blood pressure is just fine. Probably because I find time to run five miles on an almost daily basis.
Reply to @Hiyield007: Thanks. Looks like you identify vehicles with tight channels and purely use trend lines with tight stops. Your handle HiYield provides a clue on your preference (at least in the past). My system is a little more complicated, but not as complex as most technicians use. Basically, follow returns among a set of ETFs (about a dozen), rank them based on short and intermediate term returns (adjust for volatility), pick the top 2-4 (depending on the diversity in the top pool) and never hold anything in trading portfolio below 200 day SMA. For example, I currently have EPP, EFV, RWX and IJH. I spend about 15-20 min every weekend to rank and decide if any action is needed.
Comments
"The Best Time To Buy A Fund Timing is also different with mutual funds. While IBD-style investors try to stay in sync with the general market when buying stocks, any time is the best time to invest in a mutual fund."
Cost Basis $20,000.00
Prior Close
03/19/2013
Total Value $59,081.52
This is an account that I started with 20,000 dollars in 1996. It was invested in five different Fidelity funds, experienced two major bear markets, and never had any new money added, etc. I guess it could have done better..but it could have done much worse - if I would have tinkered too much.
Keep in mind that Gas & Gold have had one heck of a run. The overall stock market is at about the same place it was many years ago. Still...the compounding effect works over the long term.
Being an active trader with mutual funds has cost many investors dearly. For example, investors piled out of FPACX in droves during the high tech boom. Then when high tech crashed those investors that remained faithful to their original thesis ( value-oriented investing over the long term ) were rewarded. What about those that chased stocks selling at 200 times forward earnings? Not so much.
And didn't people call for Donald yacktman's job several years ago? Talk about people with egg on their face.
I'm not advocating staying with poor managers and their underperforming funds... but...When the story remains the same ( same manager, same investing philosophy ) investors should stay put, imo. I think the disparity between mutual fund returns and investor returns make that case.
Glad I never paid any heed to the efficient market gurus and the buy and hold crowd like John Bogle. There is a big advantage to being a small fry trader as opposed to a large hedge, mutual, or pension funds, especially if you are willing to live and breathe the markets 24 hours a day - a sacrifice few are willing to make.
several months) in tax-sheltered. I use ETF upgrading based on momentum (my own combination of qualitative and quantitative factors, but purely based on price/returns). Generally look at M*, etfreplay.com, stockcharts to look at returns, moving averages and trend lines. Don't like to use any more complicated signals. Can you please share your trading philospophy in general?
Over the last ten years I've paid off my house, purchased cars, gave away thousands to an ex whatever she calls herself nowadays, etc -- and I'm still well ahead of the market averages with those expenditures included. How ? Well selected mutual funds.
Before that my former broker secured a capital loss of 100,000+ with several bone head moves. That was when I became a self directed investor and started trading myself. When I finally got back to even -- for the sake of my blood pressure -- I stopped trading. Also, I enjoy my free time out fishing better than reading charts. Constant living & breathing the market can pay off...but at what price? Some of us make it part of our daily ritual.. some just don't care.. I know i've found my own happy medium
Bottom line:
I still believe this article by IBD holds true for 99.99% of the general public. While my tiny winnie annuity contract doesn't come close to any 1,370,072 Donald Trump account -- It has caught a triple -- when the alternatives are factored in -- isn't that bad.
I congratulate you on your investment success & hope it continues.
I just happen to believe that if you are someone like myself with limited skills, abilities, and intelligence, that the only way to achieve one's financial goals is by a 110% total commitment to the process. One of my favorite books, Secrets of the Millionaire Mind (T. Harv Eker) covered this topic extensively. I wish that book had been published long, long, ago when I was a struggling trader for more years than I care to remember.
Even if you factor in my taxable account to the IRAs you referenced, I am by no means rich but simply a small-time, Average Joe Trader who over the years happened to be at the right places at the right times and took the required actions. I would much rather be lucky than smart.
Oh yes, my blood pressure is just fine. Probably because I find time to run five miles on an almost daily basis.