Portfolio 101
 

Piss it away on sex, drugs and rock&roll, then be a burden to your kids.:D

Ok, so y'know, stocks have always been very big moneymakers in the long run. The Dow Jones is an index of stocks and you can see on the graph on this page that, anywhere on that line, if you put your money in and then take it out 30 years later, you've made a shitload of money, right?

http://finance.yahoo.com/q/bc?s=^DJI...off&z=m&q=l&c=

BUT, if you put all your money in ONE stock, that's VERY risky - because that one stock could turn out to be Enron. So, they invented mutual funds, specifically for people who don't know about the stock market.

In a mutual fund, they pool all the money from a bunch of people and buy many different stocks instead of just one or two. So you could spread your money around to 100 different stocks without having to be a millionaire, and somebody in an office in Paoli, PA* manages all this stuff for you without you knowing a bit about it... and every three months they send you a piece of paper to tell you how much money it is so far.

These days they offer scads of different funds that group stocks together differently - so you could have one fund that was all risky, and another that was very conservative, different kinds of funds for different people's needs. This makes sense, because if you're 25 you can afford to risk more of your money, while if you're 65 you want to make sure it isn't going to disappear in a short time.

"401k" plans often, but not always, say you can spread your money around in different ways, so you can make the choices that are best for you. The problem is that sometimes they also give you the option of putting that money into the company stock. This is what blew out a lot of the Enron people - they were stupid, they chose to put 100% of their 401k into Enron. For a short while it looked like a great deal as their money skyrocketed, and then they found out it was the worst deal ever.

So if you have the option you should put 0% of your 401k into the company stock, and just pick a fund that works for what level of risk you like, and don't get too tricky about it. And when they send you the pieces of paper just put them away in a box somewhere and forget about them.

*if the funds are Vanguard, which is in Paoli.

It's the best thing, believe me... they just want to sell their own stock and make the employees personally invested in the company, but you're already invested in the company... you have a JOB there.

My $0.02...

--Decide what kind of risk you're willing to take. You're still young; you might to want to put more in stocks. I'd recommend 10-20% in stable assets: savings and treasury bonds.
--You can't really argue with the awesomeness of the S&P 500. If there's a fund based on the S&P, go with it.
--If there is a fund based on NASDAQ stocks, put a little in there. You never know when tech might come roaring back.
--Buy some company stock...just not a lot.

I had 75% of my $$ in high tech, high risk stocks when the shit fellout in '01. I lost half of the $$ I had in there. A few guys i work with had the same thing happen. They pulled their $$ out and moved it into bonds, which were the only safe bet at that point. I was going to, but in talking to a customer that does that stuff for a living, he said: you're young. You're in it for the long term. leave your money right where it is. All of the stock that you are buying today is "on sale" while you may lose dollars, the units you buy don't dissapear unless the fund bankrupts, which just doesnt happen. So, i left it alone. I am now back above where i was before it fell apart, and i have much more stock(units) if and when the high tech stuff starts moving well again, my increases will be proportionately larger. I keep 25% in a small business growth fund that is considered medium risk. as i get older, and have more riding on it, i will lower my risk levels.

but, then again, i know about ()that much more than you do,OC. relative to what the pros know, anyway.

i happen to be a stock broker with one of the top 6 in the nation. Van guard is not my preferred vendor but they do have some very nice funds. i don't know your specifics so i couldn't make any solid recommendations, but if you are in your younger years with quite a while til retirement then you can invest more heaviliy in growth funds and growth and income funds. as you get closer to retirement you will need more security so you will move towards income, and growth and income funds. also - don't stop at your 401k, start a Roth IRA, it doesn't take much to start and you will be so happy that you did as you get closer to retirement. where in the country are you located? i may be able to recommend you to someone who can help you locally.

some EPP are really good. i know of a few companies that hold your money all year (you determine the amount) while it earns 5%. on a given day they knock 15% of the lowest trading price in the last 2 weeks and you make your buy. you can sell it at any point in time for at least the 15% profit. assuming your company didn't go to shit the day you made your buy/sell orders.

sorry, i'm not sure what NC is.

wow - i'm feeling pretty stupid right now. i'll have to do some digging but i do know one of the guys from my company in NC.

oh, i just dropped him a wire and he is unavailable until mid-june. you probably can't wait that long so go to edwardjones.com

you can find the broker closest to you. just give them a call and they would be happy to help - i'm sure of that.

when i saw NC - i forgot that i had asked your location. i was running through the list of "cellar acronyms" that i had seen and was drawing a blank. i need a nap.

fees are earned when transactions are made. (such as purchases in your future IRA - don't miss the boat on that) if you spend 5 minutes on the phone with the broker explaining what info you are in need of he/she should just tell you their thoughts on the hope that when you really need a broker for a purchase outside of your 401k, you will come back to them.
if you run into someone who isn't willing to help, let me know.

The most important thing you need in order to be a good investor is an understanding of your own risk tolerance and secondly, how each instrument relates to your tolerance. Thirdly, you need to know your investment horizon -which, for this discussion, is the time till your retirement.

First of all, what's a stock and what's a bond. Simply, a stock is a "peice of the company." if the company has 100 shares and is worth 100 dollars, each share costs and is worth one dollar. If you buy one share and the company becomes worth 200 dollars, your stock is now worth 2 dollars. Conversely, if the company goes under, your stock is worth zero. The sum of all the stock in a company equals 100% of the ownership of the company. As a stockholder, you ARE an owner of your respective share of the company.

What's a bond? A bond is a loan by you to the company or government entity. Nevada issues $100 dollars of bonds and you buy $1 of the issue. The bond pays 12% interest and matures in 20 years. So, you get 12 cents a year for 20 years and then you get your dollar back. Bonds are so fucking complicated, however, that you wouldn't believe it. The rules governing payout and what happens if the bond defaults and who gets paid first, second and third would make Einstein run for the hills.

Since most investors either don't understand or don't care to get that involved in individual stocks or bonds, funds exist that invest FOR you in a wide specturm of stocks or bonds. These are mutual funds (stocks) or bond funds. These funds iron out the irregularity of investing directly by spreading out the investment across a very specific category of stocks or bonds.

Bond funds are extremely safe but are low-return instruments. You ain't gonna get rich investing in bonds. I would invest no more than 10% in bonds.

Stocks are best invested in by buying mutual funds. This is basically giving 100 dollars to a smart guy/gal who eats and breathes stocks. He takes your money along with mine and "goes shopping" - buying and selling as (s)he sees fit to maximize the value of the "portfolio. Investing in a stock fund is a simple matter of choosing what type of fund suits you. A high-tech fund is high risk but potentially high reward. A S&P index fund mirrors the entire stock market and is essentially like investing in every stock in the entire market. More stable than a specialty fund and therefore has less upside/downside potential. If one company in the fund tanks, you won't even feel it. If you bought that company's stock directly, however, say bye to your money. A mutual fund typically has no more than 5% in any single company and usually not that much.

Vanguard is an excellent company. Call your rep - descibe your risk tolerance and choose a couple different stock funds. You can always change your future allocations if you change your mind.

Hope that helps.

thanks to the IT guys for another great first impression. just this morning we had the drop down menu for states, so they must just be upgrading it rightnow.

that is long term. for most people that would mean you have the ability to withstand more market risk in your portfolio. BUT that really has to be a judgement call by you. if you are the type that is going to pull up your account every day/ week/ or even month then you should play a little more conservative. the thing to keep in mind that this is retirement money, not going on vacation, or buying a house, or buying a lot of beer money. if you can trust yourself to only give your 401k a solid review every 6 months and refuse to pull your money out when your gut tells you to, you will be just fine.

the problem is that people have too much access to financial info without the discipline to do the right thing. that is because the right thing in investing is usually scary and uncomfortable. i think it was LJ who said it earlier - when the tech stocks crashed a lot of people pulled there money out and put it into bonds - the people who REALLY invest well are the ones who put more money into stocks.

there are 2 concepts to stick to religiously in investing
1) Buy. now. buy more. buy - only sell when there is a fundamental change in the reason you bought the stock. price going down is not a reason to sell, it is a reason to buy more.
2) time IN the market will ALWAYS beat TIMING the market.

i love having an investor who trusts my professional advice. one who is willing to ride out the bumps and do the thing that feels wrong. one who is willing to look at the big players and realize that if it works for them it will work for me.
i hate dealing with the daytrader mentality. 1st thing i tell new clients is that they have to close their online accts or at the most look at them the same way i look at a roulette wheel - something fun to throw limited amounts of money at with the chance of winning some, but a higher likelihood of losing all.

*steps off soapbox*

just so you know - i don't even have a stock ticker on in my office. it is just a distraction that can cause paralysis. (the guys who need it in front of them all the time are at a much higher level)

Sometimes it is hard to find out through a company 401K, but expense ratios are very important for mutual funds. Vanguard has one of the lowest in the industry.

If your company matches any amount, even if its only a percentage, like %50 of what you put in up to %x of your salary, you are throwing money away by not putting it in.

One set of priorities for investing is:

1) Whatever amount company matches. This is free money. It may take a while for vesting, but after you have been with the company 5-7 years, it can be a %50-100 gain on top of the funds performance.
2) Pay off credit card debt. Removing a %15-22 deficit is more important than any gains from investments.
3)Company 401K or Roth IRA using after-tax income. I have heard opinions that funding a Roth is better than a 401K. One advantage to 401K is that some plans let you borrow money from your 401K and pay yourself interest instead of borrowing from a bank. When investments are not performing, paying yourself the %7 interest is better than paying it to a bank.
4)Traditional IRA

This is just opinion. An accountant I know told me that he couldn't believe that Congress gave so much away on Roth IRAs.

if the company matches at all on 401k jump all over it. then move onto a roth because after 59 1/2, withdrawals are 100% tax free. Awesome. again, there are pros and cons to each, tax bracket now and expected at retirement are important considerations.

My 2 cents.
All the advice I've seen here is sound. But the most important analysis just isn't discussed much.Ten years ago I thought I had the world by the balls.I had been working for the same people since I was 18. Through SEPs,401ks and a company pension I thought things were looking great.I contributed a lot.Not the maximum,but a good amount.I had what I thought was a good marriage.I had a humble (but cheap) home in the country.Two beautiful children.It was about this time that I shifted most of my money into the tech secter.Trying to heed the advice of professionals I held on as the money went away.Then my wife left me.She moved 2,500 miles away.I bear my share of blame for letting this happen.I trusted her and I should not have.But...
I need to be a father.Thats all I ever really wanted to be.I didn't see that earlier in my life.
I had to quit my good paying union job after 24 years.It was financial suicide.I knew that.(As an aside...Oregon is not leading the country in unemployment for the first time in quite a while.whopee!).
Its amazing how quickly you can burn through your saving.I was days away from heading back home when I finally found a job here. I'm making almost exactly half of what of what I made in NY.As a consequence I had to pull money out of my IRAs. I had no choice.
I'm sorry for rambling. Heres my point: Financial advisers will give their advice based on what you tell them. But nothing is more important than the circumstances of your life.I look at my own experiences and wish I had been more conservative.

now where is my crystal ball
 

I recommend putting in the maximum amount that your company will match. It depends on how your company’s plan is set up, but here we get 50% of our contributions up to 6% of our salary. If you think about it, you’re getting an automatic 50% gain on your earnings and no fund manager can beat those kind of returns.

As for the individual funds, there should be some sort of guide that you can read about the different options your company offers.

I went with an Index fund for my 401(k) because fund managers are all a bunch of crocked, greedy bastards.

This is a pretty good site for basic information in laymen’s terms: http://www.fool.com.

I stay away from their investment “advice”. These guys garnished a reputation for working miracles back in the 90’s and truth is, a blind monkey with a dart could pick a winner in the 90’s. They do a really good job of breaking things down so that you can understand them.

While I kind of deal on a different scale to I'm guessing your average 401k, remember there are plenty of investments outside of the stockmarket and outside financial instruments full stop. Commodities, private equity, cash, there and many other markets that can act as a hedge and if well managed have better returns. All depends on style really.I do however know absolutely fuck all about 401ks.

I had $15,000.00 in a 401k Mutual Funds pool, and after the dotcom bust, I was left with $6,500.00.

Just a note that *any* investment can help you lose your money, even the *safe* ones.

I went to vanguard.com and under personal investors, research funds and stocks tab, they have a link called Narrow Your Fund Choices Tool; and that's kinda a good way to go through and figure out what funds are best for you.

Stock Investment - Part I
 

Those who invest in mutal funds always underperform the market. This is fact well proven based upon market history. In short, the so called professionals are some of the worst market investors. For example, at one point, MSNBC (I think it was) put a famous investor up against the monkey. Monkey selected based upon darts to a board. He outperformed the market specialist. Market professionals are too buy selling themselves rather than learning what really makes a good investment. There is great profit in selling themselves because so many laymen think you must be an economist or some kind of professional investor to invest in stocks. A concept better called a scam.

A best general source of information is the Nightly Business Report. Especially when Paul Kangas does the reports. Espeically Friday night when a market professional does a 5 minute summary suggestion. Listen to what he says. If he hypes cyclic trends and capital expenditures, then run. However if he talks about the company product and industry trends, then put his stock in your basket of 'stocks to watch'.

I spend much time watching and studying markets. Bloomberg Radio is another interesting source. But many information sources such as Wall Street Week with Fortune are a waste of time.

Lessons from both Peter Lynch and the sage of Omaha Warren Buffet are far more instructive. Read their books. What do both look at? Not the fancy numbers games promoted by market hypsters and other experts. Peter Lynch was most blunt. He followed his wife and daughters around the mall. Learned what they and their friends most liked. Then learned about those companies. Peter Lynch being 10 years every year consistent the best mutual fund administrator in market history. Look at what he is saying. Its not about economics and investment savey. That is what the ignorant liars must promoted so that you pay them. "Its all about the product stupid". Yes it is that simple to summarize - and more complex to do because you must do it every day or at least every week.

Again, mutual funds average less than the market. Obviously. You are paying a few percentage points every year to an 'expert' who really knows nothing more about the products than anyone else but must earn enough money to make his (industry average) $150,000 to $200,000 per year. Their profits - not yours - are their most important objective.

If you do go into mutual funds, then the best performing mutual funds are always index funds. No professional to make decisions. Therefore the penalty points (fees) are minimal. This is why index funds always outperform the average of all mutual funds. No professional taking big buck out of your investment portfolio.

What is an index fund? For example, one fund must buy every stock on the S&P 500. No market expert getting paid to make decisions. The decision was up front. They will buy every S&P 500 stock. No human taking his cut is why the index funds always return a higher average investment. Further caution. Many mutual funds have other hidden fees. More money that will not be there to be invested the next and further years.

But again, I return to Peter Lynch who only says what virtually every famous market investor says. Stocks, rather than mutual funds always average a higher rate of return. You buy a basket of five stocks - which is what he recommends the average investor to bet on. One will always be a dog. Three will be average performers. And one will be the star that more than compensates for the dog. It works. Literally any money I have is only from investment. I don't play money games. I learn about the products, invest with the intent of staying there at least three years - usually more. Look at stock prices every day or maybe three only to learn the 'attitude' of the market (how todays price reflects what the market rumor mill is saying), and get out only when it was obvious there was too much extravagent exuberience. IOW got out of everything after maybe 10 years.

Friday night at 6:30 or 7 on PBS. This is a good place to start. Nightly Business Report.

You have seen how I post. It is that same march forward on facts so solid as to not waver in attitude. Attitude necessary to make money in the markets. Too many people buy and sell only on the same 'feeling' that said there were WMD. Emotion is why we can make money at their expense. They brag about profits. But when I compare their examples to stock history (as I did with one 7-11 Store owner), they are not making much money. Instead they are enriching their broker while bragging about mythical profits.

Brokers don't like me. I don't make them big bucks. No one really makes big bucks by playing the market. Brokers should only make money when you buy and sell. Period. That means stocks - not mutual funds.

It is a rare individual who made even $20,000 per year working fully time by day trading. Very rare. For the same amount of money during that time, the patient investor made closer to $100,000. This is why you look at the product. Only product and its market will tell you what the company will be making in profits for the next 4 years. Hypsters and stock brokers are too busy studying financials and cyclic trends rather than learn what really makes a stock profitable. They look too short term.

Which comes to the part of how to look at the product. First, I don't know anything about the retail food industry. I don't even try to invest in retail. I don't understand the product. Invest only in what you understand. What is your background? Start there.

The first stock will always be a loser. (And don't invest in your own employeer). You must do that to really understand investment. Until you do so, you will always be a loser at the investment game. Example of a big loser. $5000 in a stock that sells for $4800 three years later. So why is that so important? Because without that $5000 at risk, you will not view your investment with the proper mental attitude. There is a big difference between being at risk and only playing a fictional stock market game. BIG difference in how the human brain analyzes the day to day events when the risk is real.

IOW don't drop everything into stocks just yet. Start only with one. And how do you analyze your current and future potential investments? NY Times and Wall Street Journal are essential. Barrons Weekly is periodically helpful. Industry trade rags are important.

In the newspaper stores, smart investors looking at the inside page of a WSJ or NYTimes. They are looking at list of companies often indexed on second page of second section. They are looking for any articles that mention a company from their 'basket of stocks'. That is what the investor does. He looks every day not for the big news. Notice how I get so much information about George Jr and Iraq. I constantly look for the little details. That is what the smart investor is doing everyday. Keeping his eye open for any trivial little detail involving a stock and the industry of that stock. Looking mostly at the products. Those details suggest well in advance what the future is for that industry and whether it is time to invest.

[continues on next post]

Stock Investment - Part II
 

[continued from the previous post]

Take the computer industry as an example. Clearly Microsoft and Intel - great companies - are not positioned for any major market breakthroughs. Both are good stable investments if you are 60 or 70 years old. But at 35, your investments must be growth. That means moderate risk with growth potential. Maybe a revival of the semiconductor industry would mean Applied Materials or Novellus - both have been dogs for a while. But first see some reason why the semiconductor industry is poised for a serious upswing. Again, good investments worthy of watching. But maybe not currently good.

What about Nokia? The cell phone maker (which is another branch of the computer industry). Maybe except that phones are now becoming commodities. Too much of the advanced technical work so successfully achieved by both Nokia and Erricson is now performed by new, upstart (even Chinese) companies. Amazon is worthy of watching. Profits are not yet there but the product line is quite good and innovative. Adobe still has a good market without any serious potential competition and with still many new future advances for their product lines. Qualcomm is in the driver seat for cell phone technology. Therein lies a few stocks to keep watching if you understand the computer business. Will the networking business finally create enough demand (will the last mile companies finally stop impeding the growth of broadband)? Questions answered by watching every article about Cisco and Juniper Networks. Questions answered by watching how the cable companies and baby bells either stifle or promote internet growth.

See how it goes? There is nothing fancy about stock investment except by understanding the only reason for growth - the product and its markets. Don't let the market liars have you think that investment is only for professionals. Again, the market experts average underperform the markets. Product is why Peter Lynch and Warren Buffet were such good investors. Warren Buffet says he only invests in what he understands. Bill Gates is one of his closest friends. But Buffet still will not invest in computers. He does not understand the product or its market.

That is what you must do. First put most money in index mutual funds that have the smallest annual fees (penalty costs). Invest in a few hundred shares of one stock. Always buy stocks in groups of one hundred shares. Within a year or two, then you will be ready to move from index funds to a basket of five stock. And yes, that means reading about and learning the products. Don't waste time on useless publications such as the Daily News, Action News, or the local gossip newspaper. You must read real news. That means serious sources from time to time such as Barrons, NY Times, Wall Street Journal, Washington Post, Philadelphia Inquirerer, or LA Times.

I cannot say enough about PBS's Nightly Business Report. Friday is an especially important day. A visiting market expert on for a quick 5 minute presentation. Listen to what he/she says. If he taulks like an economist or accountant, then ignore him completely. He is a classic stock broker plying lies to get other person's money. But if the presentation discusses stocks in terms of why they have a good product or market, then add that stock to your basket of 'stocks to watch'. From that 20+ basket, you will eventually select 5.

Do not invest in futures. Do not sell short. Do not buy stock options. All that is complex and dangerous. Just buy five good common stocks knowing that no matter what happens, you must still own those stocks five years later. That is how the smart investors make big bucks. No churning (buying and selling every year). No reinvestning the few dollars of dividend into shares every three month. Just a straight forward investment in common stock by (and only use) a discount broker.

You don't need a full service broker. Their advise, based upon historical averages, is inferior to the average investor. In reality, the full service broker is a fancy, shined-up salesman whose job is to get you to do what is in his best interest. He is the poor student in school whose only objective in life was the $150,000+ per year salary. Yes, whores make that much. Uses a Discount broker. One common stock sometime in the next three months is where you begin.

For those others - your first stock investment should have been by the time your were 25. That way, when you were thrity, then you have enough feel for the market to be earning good money in your 30s. Oynxcougar is an example of an investor who has started too late; who must now play catchup. And of course, those who invest in mutual funds only make the stock brokers richer at their own personal expense. Mutual funds routinely underachieve.

tw - you have your head so far up your ass on this one that i don't even know where to start.

Tear his arguments apart then.

Re: Stock Investment - Part I
 

oh...my...god.

can you even imagine?

You're a 711 owner, and tw comes in. Wearing an overcoat and a stetson hat, no doubt. He purchases a coffee, and says "how bout that stock market". Unsuspecting, and unaware of what you are about to do, you say, " yeah, my mutual fund is doing great."

I think you all know what happens next ....~shudder~

45 minutes later, as you dab the blood from your ears, he finally leaves, and gets into his 95 Ford Taurus, and drives off into the rainy Monday morning. It's not going to be a good week.

One of my 403(b) accounts (it's the same as a 401(k) but are set up for non-profit organization employees) is through Vanguard.

I don't know if these funds are open or closed at this point, but you might want to take a look at the performance of the STAR fund and the Balanced Index Fund.

tw, guess what... OC's money market fund selections have outperformed the market over the last two years. And your hero (and mine) Peter Lynch made his beans running the biggest money market fund...

Care to post your stock choices so we can vet them for you and help your research, or do you prefer to keep this careful diligence to yourself?

OC I think your selections are fine. Personally I would be more in the growth fund - and I am (my choice is VSEQX), even though I'm a little older than you. But this is on the level of nitpicking. You're in good shape, now sit back and let those pieces of paper come in.

Depmats had posted a response to tw...I wonder why he deleted it.

Maybe he remembers leading a horse to water, before.:)

Let me give this a try. unlike tw i do this for a living so i will not make any recommendations on here. (proper recommendations are on an individual basis.)

buzzzzzz, guess again. of the 4 fund families currently sitting on my desk, 3 have outperformed the market over the last year and all 4 over the last 10. here is a quick exercise. imagine that you can travel back 70 years ago and invest $10k in each of 5 stocks (or predecessors) from this list: Alcoa, Altria grp, Am Espress, At&T, Boeing,Caterpillar,Citigroup,Coca-cola,Disney,Dupont,Kodak,Exxon,GE,GM,HP, Home depot,Honeywell,IBM,INTEL,Int'l Paper, J&J,JPMorgan Chase, MCD's,Merck,Microsoft, Proctor&Gamble, SBC Communications,3M, United Technologies, WalMart

If you had picked the top 5 performers you would hold $18.3Million. If the same $50k had been invested in my favorite conservative fund you would now hold $28.5 million.

This is not an unusual story. A properly managed fund has the ability to throw out stocks that underperform and pick up stronger ones - thus keeping only the best players in the game. that means better returns for you -tw.

quite simply - if you are paying "a few points" then you are picking really bad funds. industry averages are around 1.4% my favorite funds are well under 1%. And believe it or not - the fund managers do know more about the market than you. They live,eat, breathe the market. do you have an entire team of people to break down a company to figure out which way the stock should go? nobody is correct 100% of the time. someone good is right @75% of the time. as far as their (our) profits being more important than the client's - if you aren't aware, we make less money from selling funds than from individual stocks. (breakpoints, longer holding period, less overall turnover) so who's needs are being met by recommending funds?

over what time period? investing is not a windsprint but a marathon.

index funds are not bad, but not the best long term performers. they hold every stock, so that means they hold all of the losers too. i would rather pay 5% (before breakpoints) to get into my favorite fund - because i will more than recover that in gains. again - a well managed fund...


you're right - you don't make big money by "playing the market" - buy and hold is the philosophy that most brokers subscribe to. brokers probably don't like you because you are not a good client to have. my guess is you argue, insult, and ignore professional advice. out of curiosity - if your doctor tells you that _____ is what you need to do, do you assume you know better than they, and ignore them? BTW, do brokers dislike you in a greater numbers than the general public as a whole?

what averages would those be?

that is the fastest way to lose your ass. that is the exact opposite of a diversified portfolio. of course, that is what you may have to do if you think you are more qualified than any full service broker.

wow - you sure pegged me and my peers. we were lazy ass scheisters, who didn't bust our ass to jump through all of the hoops to qualify for licensing. S7 exam - only 66% of the people who take it pass. most companies only allow one shot. this is serious stuff, and the vast majority of us take the responsibity given to us VERY seriously.

yes that is ideal - but when it comes to investing it really is better late than never. be realistic about your goals and ask professional advice about what may be the best way to get there.
i recommend that most people stick primarily with quality funds until they have put together around $50K then start branching out a little more aggressively into individual stocks and bonds.

the most important thing i can say(again) is that investing is not for the undisciplined or the weak willed. wise investing will chew your guts up sometimes because the best thing to do is generally the opposite of what your instincts tell you. it is a scary feeling buying into something when you see it has been going down. but you don't wait until a shoe sale is over to make your purchase do you? a full service broker allows a barricade between your emotional instincts and your investments.

Because what I had posted is pretty mean spirited. But if you insist, tw is the kind of guy that if he comments that it is cold, I could set his coat on fire and I would still not be able to convince him of anything other than what he already believed.

tw has contempt for those who post with emotion rather than using logic. Look at Lookout123's recent post. He does post facts. Nothing mean spirited in anything he posted. He posted his perspective using factual information.

UT also posted facts. For example he noted one of the Vanguard funds cited is a excellent performer. Some are. Others are not. The overall market average for mutual funds is to underperform. Your perspective may vary. That too is a fact.

In the meantime, a five year chart of that cited Vanguard fund. Did they have management change a few years back? Cited elsewhere is that Vanguard fund managers typically stay with the fund for about 3 years.

again - i have 4 fund families on my desk. my fav. has had 80% of the team in place since before the 1987 correction. 50% since before the 1973/4 correction. tw - although you carefully research for support of your views, you have taken anecdotal information and built an entire system of belief around it. you probably know as well as anyone that 5 years is just a blip in the market. you stack your top 5 picks against my balanced fund portfolio and i will come out ahead in the long haul.

I don't know, but I don't need or expect it to outperform every single year... this is long term money

has anyone taken the time to figure out why it is better to choose a solid fund with what seem like mediocre returns, compared to grabbing the best performers and running with them?

it's simple - the arithmetic of loss is devastating.

grab your calculator. this is an extreme example but say you are really aggressive (that is the only way to show HUGE gains on individual equities) - starting with $100K

1st year - 60% gain
2nd year - 40% loss
3rd - 60% gain
4th -40% loss

you would have $92K left.

a fund that only got 5% 3 out of 4 years and broke even on the 4th. 5% is half of what most decent funds are doing over a 10 year period.

1st - 5% gain
2nd - 5% gain
3rd -5% gain
4th - 0% gain

(conservative funds are designed to NOT lose money on the bad years. everyone gains money on good years - it is what happens during the down times that matters.)

you would end with $115K going at it extremely conservatively. in reality the fund i have been talking about has averaged an 11.35% return over the last 10 years AFTER sales charges.
4th - 0% gain

Um, brilliant response to getting your rear handed to you by the real facts. And by the way - keep your contempt, I've got enough.