Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Yes, where is SEQUX? Perhaps the greatest mutual fund of all time. And YACKX, LKEQX or VEIPX?
I'm honestly starting to think articles like these do more harm than good.
The general media advises we allocate largest portion of our portfolio to large cap. Trust established houses, like D&C and Fido. Buy & hold. Because over long term, returns will be superior.
But does anyone really put their money away for 20 years without concern for interim drawdown? I suspect not. Maybe we should, but very, very hard to do.
So, DODGX, which I own, drew down nearly 60% in 2009, not 43% as implied in the article. Substantially worse than SP500.
Kiplinger, like M*, has been a long-term advocate of D&C. Can't tell you how many times I've seen DODGX on top of their best-of lists.
But if you are willing to accept DODGX-like downside, why not pick Fidelity New Millennium (FMILX), which has delivered truly extraordinary absolute returns over the long term, like 13.3% annually versus 10.9% for DODGX? Or, why not Sequoia or Yackman, which have delivered higher absolute returns, consistently, with much lower downside volatility?
As a minimum, shouldn't general media inform folks of deep periodic loss well established "top" funds, like DODGX, have experienced...and likely will in future?
None of the 7 funds listed in this Kiplinger article are MFO Great Owls, which highlights funds that have consistently delivered superior returns while mitigating drawdown. Here's how these 7, emboldened, compare:
Lists, schmiths! Every freakin' publication or commercial web site does this. And all of them use their own screens to create what they tell people are the funds to buy NOW. In early 2009, investors were running for exits. It did not matter that there were great managers and teams running these same funds. That's because the media were telling folks to SELL, SELL. People read Kiplinger's must-have list, then they see Money's list, then they read Cosumer Reports' best-buy list, and on and on.
I'm not dissing the Kiplinger list...they are all ok options. The problem I have is that many individual investors don't stick with any of their funds long enough to achieve the returns the funds have netted over the long term. They bail when things get tough, jumping to another publication's 'best' list. There is a difference between investing and trading.
Reply to @BobC: Hi Bob. Part of issue is expectation. Investing in stock market comes with serious potential for deep, rapid loss, which I feel never gets articulated enough. Most of the "best of" lists are based on absolute returns. And none, to my experience, ever publish maximum drawdown. The community is biased to rising markets, except maybe CNBC.
Most folks are simply not prepared to deal with 60-70% reduction in their life savings, even if it's "temporary" and only "on paper"...or two 50% reductions like in last decade. During down periods, like summer 2007 to spring 09, investors get reminded of their rapidly deteriorating balances with each monthly statement, at minimum. "How can my account be down when I own the top-rated fund from Kiplinger?!" Or, "How can I be losing money when I have a fixed income bond fund?"
Yes, institution and individual alike, can be well served when advocating "investment" over trading. I'm just not sure investment today means parking your savings in one place for years and forgetting about it.
But it's worse than that.
Funds houses and advisers make money whether investments rise or fall, though granted bulls tend to raise AUM. So, it can also be self-serving to advocate buy and hold "investment". And, it exposes everyday investors to abuses of indefensible front loads, high ERs, mediocre funds.
The scary part is what is the alternative? It does seems proper investment choices will demand a more knowledgeable investing public, like Scott has written about. Seems too that there is a growing need for astute, high integrity, low cost financial advisers that individual investors can trust and afford...is there such a thing?
Enough, too much rambling on this important subject this early in the morning. I've not even had my first cup of coffee!
Comments
Regards,
Ted
I'm honestly starting to think articles like these do more harm than good.
The general media advises we allocate largest portion of our portfolio to large cap. Trust established houses, like D&C and Fido. Buy & hold. Because over long term, returns will be superior.
But does anyone really put their money away for 20 years without concern for interim drawdown? I suspect not. Maybe we should, but very, very hard to do.
So, DODGX, which I own, drew down nearly 60% in 2009, not 43% as implied in the article. Substantially worse than SP500.
Kiplinger, like M*, has been a long-term advocate of D&C. Can't tell you how many times I've seen DODGX on top of their best-of lists.
But if you are willing to accept DODGX-like downside, why not pick Fidelity New Millennium (FMILX), which has delivered truly extraordinary absolute returns over the long term, like 13.3% annually versus 10.9% for DODGX? Or, why not Sequoia or Yackman, which have delivered higher absolute returns, consistently, with much lower downside volatility?
As a minimum, shouldn't general media inform folks of deep periodic loss well established "top" funds, like DODGX, have experienced...and likely will in future?
None of the 7 funds listed in this Kiplinger article are MFO Great Owls, which highlights funds that have consistently delivered superior returns while mitigating drawdown. Here's how these 7, emboldened, compare:
I'm not dissing the Kiplinger list...they are all ok options. The problem I have is that many individual investors don't stick with any of their funds long enough to achieve the returns the funds have netted over the long term. They bail when things get tough, jumping to another publication's 'best' list. There is a difference between investing and trading.
Most folks are simply not prepared to deal with 60-70% reduction in their life savings, even if it's "temporary" and only "on paper"...or two 50% reductions like in last decade. During down periods, like summer 2007 to spring 09, investors get reminded of their rapidly deteriorating balances with each monthly statement, at minimum. "How can my account be down when I own the top-rated fund from Kiplinger?!" Or, "How can I be losing money when I have a fixed income bond fund?"
Yes, institution and individual alike, can be well served when advocating "investment" over trading. I'm just not sure investment today means parking your savings in one place for years and forgetting about it.
But it's worse than that.
Funds houses and advisers make money whether investments rise or fall, though granted bulls tend to raise AUM. So, it can also be self-serving to advocate buy and hold "investment". And, it exposes everyday investors to abuses of indefensible front loads, high ERs, mediocre funds.
The scary part is what is the alternative? It does seems proper investment choices will demand a more knowledgeable investing public, like Scott has written about. Seems too that there is a growing need for astute, high integrity, low cost financial advisers that individual investors can trust and afford...is there such a thing?
Enough, too much rambling on this important subject this early in the morning. I've not even had my first cup of coffee!