band@hao.UUCP (07/15/83)
I just got an advertisement from "The No-Load Fund Investor", a
quarterly mutual funds investment advice service. I have no
experience with stocks - I'm timid but interested. I haven't much
to invest and would rather not lose it (which, of course, makes
me unique). So I come to the experts in this corner of the net.
Are these guys for real? They sound too get rich quick slick.
It sounds like the sort of thing I expect to find in matchbooks
and in the back of "Psychology Today" [ :-) ].
If (no-load) mutual funds are so good and failsafe, why doesn't
everyone use them?
If the people who direct the investments of the funds are clever
enough to always make lots of money with the fund's portfolios,
why are they doing it? Why not just invest their own money and
get rich themselves? And are the publishers of "The No-Load ..."
rich from their mutual fund investments?
Does anyone out there use the advice in the "The No-Load Fund Investor"?
Will anyone out there admit to owning shares of, say, "44 Wall Street"
(111% !) and to enjoying having doubled their money in the last year?
Are mutual funds listed with other stocks in the paper? If not, how
does one keep track in real time on how the investments are doing?
I sound skeptical because I am skeptical of anything that sounds too
good to be true - because it usually is.
Peter Bandurian
ucbvax!hplabs!hao!band
decvax!brl-bmd!hao!band
seismo!hao!bandcharlie@cca.UUCP (Charlie Kaufman) (07/19/83)
Replying to:
I just got an advertisement from "The No-Load Fund Investor", a
quarterly mutual funds investment advice service. I have no
experience with stocks - I'm timid but interested. I haven't much
to invest and would rather not lose it (which, of course, makes
me unique). So I come to the experts in this corner of the net.
Are these guys for real? They sound too get rich quick slick.
It sounds like the sort of thing I expect to find in matchbooks
and in the back of "Psychology Today" [ :-) ].
First, mutual funds are legitimate investments. Current prices are
listed in most newspapers that list stock prices. The stock market has
done exceptionally well in the last year and mutual funds have shared in
that growth. The profit figures in the NO-Load Investor are undoubtedly
correct, since they are easy to compute.
The catch is that past performance is a poor predictor of what the funds
will do in the future. It is not obvious whether professional fund
managers do better than throwing darts at the stock pages. The funds
with the best record for the last year are probably the most
speculative. They will probably go down the most if the market turns
around. In my opinion, there is no reason to choose a fund based on its
past performance (but mine is a minority view). But, if you have to
choose one and have no other basis, it probably won't hurt either.
Mutual funds are inherently risky. You should not put money in them you
can't afford to lose. (Money Market Funds are an exception, but they
offer no potential for profit either). On the other hand, you could
conceivably double your money in a year or two. It has been said that
the only difference between Las Vegas and Wall Street is that on Wall
Street your losses are tax deductable. Are you a gambler?
If you're still interested, mutual funds offer some advantages over
picking stocks yourself. The biggest is that the minimum ante is
smaller. You can probably get into a mutual fund for $500 (maybe less
if you shop around). In theory, you can get into stocks cheaper than
that, but the commissions will kill you. I wouldn't recommend stocks
unless you have at least $2000 to play with. With less than $10000,
stocks will be much riskier because you will not have adequate
diversification.
There are two kinds of mutual funds: Load and No-Load. The difference
is that load funds are sold by agents, who will answer your questions,
help you decide what to buy, and help you feel comfortable with what
you're doing. For this, he gets a 4-8% commission on the sale. On
No-Loads, you're on your own. It's like a gas station with full and
self service. If you're willing to do a little extra work, you can save
a few bucks.
I believe everyone should have a little money in the stock market in
some form. It makes reading the newspaper much more interesting.
Good Luck.
--Charlie Kaufman
charlie@cca
...decvax!cca!charlieas@machaids.UUCP (07/20/83)
The No Load Fund Investor is a good book/quarterly newsletter. If this is your first experience with such funds, subscribe to both. The book is the most important. This isn't a ripoff, like some other mail order junk. I too am wary of such ads. No load funds aren't advertised because there is no sales charge (profit) for anyone to do so. Your broker will strongly push mutual funds, but he/she gets a sales commission (load) of 8.5% (really over 9% since it's taken off the top) on all shares sold. He/she won't tell you about the no load funds, on which there is no profit to be made for selling it. ALL mutual funds (load and no load) take 1/2 to 1% of the total value of the fund each year in the form of management fees. This seems fair to me, since it includes all sales commissions and I have experts working for me deciding which stocks, bonds (or whatever the fund is about) to buy. There is no guarantee that a fund that had done well in the past will continue to do so, but I'd rather use them than one that has bombed in the past. Despite what brokers will try to tell you, there is NO advantage to loaded over no load funds (except to them, the salesmen). Abe Shliferstein, Bell Labs, HO.
leimkuhl@uiuccsb.UUCP (07/22/83)
#R:cca:-516800:uiuccsb:15300006:000:347 uiuccsb!leimkuhl Jul 21 11:31:00 1983 I noticed in the Sunday NY Times that Value Line is offering stock funds with $100 or $200 minimum investments. They have a range of funds with varying degrees of risk and if I recall correctly, their performance over the past few years has been outstanding. (I remember a MONEY magazine article on the chairman of Value Line a few years ago.)