View Full Version : Mutual Funds
I monitor everything through Quicken Premiere Home & Business 2004. Frankly, I cannot imagine investing without a computer. I try to be as paperless as possible and I still have paper everywhere! (Anyone know of anybody seeking abookkeeper internship in my area? :dude:)
Since I see my stuff daily, I keep tabs on what is going on and try to keep my portfolio tuned. I also try to be in the top performing sectors. The fund universe is huge. I thought the Information Technology world was huge (it is), but investing seems to dwarf it. It may also be that I have been in computers for 23 years and investing for only 1-1/2.
Let us put our heads together and put together some nice portfolios. I'll show you mine if you show me yours.
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Fund symbol - blurb
Morningstar total returns link
RSPFX - I like RS Investments funds, they have a lot of good stuff and seem tobe in the top of their class. I bought this small blend fund when the market started to turn early this year.
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=RSPFX&fdtab=re turns
RIAFX - Tech's not dead yet...dunno if it will be anytime soon or not. It's not the leader it was last year, but still up there.
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=RIAFX&fdtab=re turns&hsection=quote
MATFX -Asian tech. I may be looking for something better to replace this, or may replace it with stocks since it is in my Scottrade account.
http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=MATFX&hsection=quo te
SCOVX - More tech, only on value. 13.75% return YTD, more than 12% more than S&P500 and no signs of slowing down much.
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=SCOVX&fdtab=re turns&hsection=quote
DRBNX - I get the impression that biotechnology will do well for a while, I just bought this in February.
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=DRBNX&fdtab=re turns&hsection=quote
REYFX - I loved this fund last year, but it went from top 1% to bottom 1% almost overnight. If it doesn't recoup its losses and then some soon, I will dump it. It is also in my Scottrade account, so I may just buy stocks instead; I can beat negative 6% YTD!
http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=REYFX&hsection=quo te
azanon
06-05-2004, 11:07 PM
I have American Century Equity Growth, Vista, and Ultra. USAA Aggressive Growth, and USAA International.
The international fund is a stop-gap until Emerging Markets drop some more, then those funds will go there. I will use TSP international for developed countries since the expense ratio is lower.
I'm only temporarily in mid/large growth as you see above because i think these will be the best performers relative to risk over the next year, maybe two. They are all solid funds, IMHO. (Equity Growth is actually large value, sorry, but i dont have much $$ in that one - its an old rollover traditional IRA from a job i had 2 years)
I hope you aren't expecting me to look up all your ticker symbols. :X
azanon
06-06-2004, 12:06 AM
I have American Century Equity Growth (BEQGX), Vista (TWCVX), and Ultra (TWCUX). USAA Aggressive Growth (USAUX), and USAA International (USIFX).
BEQGX - Not much different than an S&P500 index fund.
http://im.morningstar.com/Graph/Growth10K10Year/USA_BEQGX.png
Growth of 10K :: Red = fund, green = S&P500, orange = category average.
TWCVX - I like this one; it is on my buy list. Fogle manages it. I like a lot of its holdings. Top of its class for 1-year return. It's a "stable volatilie". I will definitely buy it instead of REYFX.
http://ichart.yahoo.com/z?s=REYFX&t=5y&q=l&l=on&z=m&c=TWCVX,^GSPC,^IXIC&a= v&p=s
http://ichart.yahoo.com/z?s=REYFX&t=6m&q=l&l=on&z=m&c=TWCVX,^GSPC,^IXIC&a= v&p=s
http://ichart.yahoo.com/z?s=REYFX&t=1y&q=l&l=on&z=m&c=TWCVX,^GSPC,^IXIC&a= v&p=s
TWCUX - Ultra? Ultra Average
http://im.morningstar.com/Graph/Growth10K10Year/USA_TWCUX.png
USAUX - It sounded good by what you told me in the chat, but I just do not see this producing. Marsico took over two years ago, so here is a 1-year chart. Aggressive? It shadows the S&P500, only at a higher expense ratio. From Janus to USAA? Something went wrong there.
http://ichart.yahoo.com/z?s=REYFX&t=1y&q=l&l=on&z=m&c=USAUX,^GSPC,^IXIC&a= v&p=s
USIFX - This one is pretty good. It performs better than average without falling below average. I do not have a broad international fund for comparison.
http://im.morningstar.com/Graph/Growth10K10Year/USA_USIFX.png
http://ichart.yahoo.com/z?s=USIFX&t=2y&q=l&l=on&z=m&c=EFA&a=v&p=s
It better-than-shadows the MSCI EAFE index. meh. I would go with USIFX for lack of a better replacement. I would like to find a more aggressive international fund.
http://ichart.yahoo.com/z?s=USIFX&t=2y&q=l&l=on&z=l&c=BEQGX,TWCVX,TWCUX,US AUX,USIFX&p=s
http://ichart.yahoo.com/z?s=USIFX&t=3m&q=l&l=on&z=l&c=BEQGX,TWCVX,TWCUX,US AUX,USIFX&p=s
I would suggest that you would do much better bytradingyour BEQGX, TWCUX, and USAUX for more TWCVX.
azanon
06-06-2004, 01:23 PM
BEQGX - Not much different than an S&P500 index fund.
That almost sounds deragatory. The goal of the fund is to enhance S&P500 index returns, which at times it does. That it mirrors the S&P500 should be of little surprise, since it is almost a large-cap blend fund. I prefer active management despite the existing arguments for indexing.
TWCUX - Ultra? Ultra Average
Like 3 month returns you say? Its currently 8%ile on 3 months, and 30%ile on one year (meaning only that percent beat ulta). For 3 years, its 13%ile. (Source: third-partyMSNMoney website)
Ultra Average? Hardly.
USAUX - It sounded good by what you told me in the chat, but I just do not see this producing. Marsico took over two years ago, so here is a 1-year chart. Aggressive? It shadows the S&P500, only at a higher expense ratio. From Janus to USAA? Something went wrong there.
Marcisco probably has a better historical fund track record than any fund you own. Hindsight is no predictor of future returns, but if it is, it will produce. Yes, i see he's slacking with only 4 stars now with Marcisco Focus (what USAA AG now mirrors). I've always owned USAA, even prior to Janus. Leaving Janus was a smart move, unless you're into being cheated.
USIFX - This one is pretty good. It performs better than average without falling below average. I do not have a broad international fund for comparison.
It better-than-shadows the MSCI EAFE index. meh. I would go with USIFX for lack of a better replacement. I would like to find a more aggressive international fund.
As i said, those monies will go eventually to an emerging market fund for two reasons: 1. The I fund covers developed countries investing adequately at a lower expense. 2. Valuations in emerging markets have me hesitating for the moment - they are near a high and on the way down.
I would suggest that you would do much better bytradingyour BEQGX, TWCUX, and USAUX for more TWCVX.
American Century is top tier stock funds among the no-load world. Marciso is one of the best there is. Ihope your quest for that top 10-20% doesnt leave you below 50%ile someday.
azanon wrote:
BEQGX - Not much different than an S&P500 index fund.
That almost sounds deragatory.
hehe, Good, I've communicated my sentiment with precision. :dude: The chart shows BEQGX underperforming the index more often than outperforming it. The differences are so small, that after 1, 3, and 10 years, the return is the same. I have to wonder, does this "active manager" even show up to work?
azanon wrote:
TWCUX - Ultra? Ultra Average
Like 3 month returns you say? Its currently 8%ile on 3 months, and 30%ile on one year (meaning only that percent beat ulta). For 3 years, its 13%ile. (Source: third-partyMSNMoney website)
Ultra Average? Hardly.
I'll give you that, but 3-month returns would be indicative of the market-timer, wouldn't it? That wasn't your strategy. :) I did make the mistake of comparing it to TWCVX, which is in a different category (so many charts, ack!).
http://data.moneycentral.msn.com/scripts/chrtsrv.dll?STATIC=C^3+Month%3BYear+to+Date%3B1+Ye ar%3B3+Year%3B5+Year%3B10+Year%3B^S^6%3BAmerican+C entury+Ultra+Inv%3B1%3B6%3B%2D1%2E07000005245209%3 B3%2E78999996185303%3B16%2E2700004577637%3B%2D2%2E 36999988555908%3B%2D2%2E36999988555908%3B9%2E36999 988555908%3B6%3BCategory%3B2%3B6%3B%2D3%3B%2D1%2E0 900000333786%3B19%2E7000007629395%3B%2D6%2E7800002 0980835%3B%2D4%2E8899998664856%3B8%2E3500003814697 3%3B^V^2%7C%25^X500Y140B16777215
It does cushion the drops better, but you sacrifice gains in order to do that. Compare to REYFX, my large growth fund:
http://data.moneycentral.msn.com/scripts/chrtsrv.dll?STATIC=C^3+Month%3BYear+to+Date%3B1+Ye ar%3B3+Year%3B^S^6%3BReynolds%3B1%3B4%3B%2D17%2E34 00001525879%3B%2D4%2E38000011444092%3B30%2E6900005 340576%3B1%2E11000001430511%3B6%3BCategory%3B2%3B4 %3B%2D3%3B%2D1%2E0900000333786%3B19%2E700000762939 5%3B%2D6%2E78000020980835%3B^V^2%7C%25^X500Y140B16 777215
http://ichart.yahoo.com/z?s=TWCUX&t=3m&q=l&l=on&z=m&c=REYFX,^GSPC&a=v&p=s
Three-month, REYFX kinda blows, and had I timed it, I would have sold at some point.Now look at one-year:
http://ichart.yahoo.com/z?s=TWCUX&t=1y&q=l&l=on&z=m&c=REYFX,^GSPC&a=v&p=s
REYFX lost more, but it gained a lot more. Even dollar-cost averaging REYFX will have you buying on some lovely dips. If you DCA'd in October, December, March, and May, you would still be ahead. Also, the dips are far more obvious, which makes it easier to know when to buy. Volatility = A friend of the timer and DCA buy-and-holder alike, no? (Bear in mind, I do not mean averaging down, a very taboo practice in any school of thought.)
azanon wrote:
Marcisco probably has a better historical fund track record than any fund you own. Hindsight is no predictor of future returns, but if it is, it will produce.
What happened to the "has-been" logic?
His recent performance has been average and is not indicative of an out-performer. What is versus what was.
azanon wrote:
I would suggest that you would do much better bytradingyour BEQGX, TWCUX, and USAUX for more TWCVX.
American Century is top tier stock funds among the no-load world. Marciso is one of the best there is. Ihope your quest for that top 10-20% doesnt leave you below 50%ile someday.
Oh! There's that "has-been" logic! :D What is the difference between seeking the top funds verses the top fund managers? Largely, the latter banks on reputation, the former banks on real numbers. Usually, they are synonymous, but I think this is one instance where that is not the case. Additionally, I anticipate that the current top 10% will not remain there and therefore continually seek the top tier performers as an ongoing process rather than hoping (an emotion) that my fund manager will remain king of the hill. My loyalty is to the numbers, not brands. Does that make sense?
azanon
06-07-2004, 02:28 PM
What happened to the "has-been" logic?
When did I post anything to that effect?.......... Oh you mean our icq discussion Sunday. Surely you recall my clarification of what I meant by "has-been"; that I meant former fund managers that are now retired, such as Peter Lynch. In contrast, Marcisco continues to serve as a fund manager to this day and, though it isnt the same exact fund, they have similar objectives. Regardless,he is definitely no"has-been". He was second to none with Janus Twenty from 87-97, and has a 4 star rating where he left off with Marcisco Focus to this day. The only reason USAA AG isnt 4 star now is because he hasnt been there long enough to erase all the poor performance of their former fund manager.
I'm just sorry to hear you're going to miss out on that opportunity. Not just anyone can buy USAA funds. In 3-5 years, we'll see who was the wiser. In fact, lets have a contest... tell me a large cap growth you own, and we'll see who beats who. Must be large growth.
Re, your comments on Ultra, i'm satisfied enough that you (indirectly) admitted that you changed your analysis towards Ultra because your normal way ofrating the fund would have put it in favorable light. Since I believe your intent was ultimately to critize me, and not my fund, your switch of convinence was both understandable and predictable. Nevertheless, you talked me into switching my funds I had there to TC Vista for the time being.
Azanon
azanon wrote:
...Since I believe your intent was ultimately to critize me, and not my fund, your switch of convinence was both understandable and predictable.
hehehe, You're projecting! :D I may critisize your thinking (and I would expect the same courtesy in return), but not you personally. I would interpret an ad hominem argument as a forfeiture of the discussion, so I would never do that. :)
azanon wrote:
Nevertheless, you talked me into switching my funds I had there to TC Vista for the time being.
Yaaay! I think you will profit more, for it is a more efficient use of your money.I'd like to see you in your Rex/Evo as soon as feasably possible.
azanon wrote:
I'm just sorry to hear you're going to miss out on that opportunity. Not just anyone can buy USAA funds. In 3-5 years, we'll see who was the wiser. In fact, lets have a contest... tell me a large cap growth you own, and we'll see who beats who. Must be large growth.
I already did: REYFX. Funny thing, I was feeling pretty dissatisfied with my REYFX andI was going to switchit to TWCVX until I compared them. (Yes, TWCVX is mid-growth, but it perfoms much better than TWCUX.) This discussion putme back in theproper perspective, reminding me that I was in for bumps and dips and that overall, I am still ahead.
azanon
06-15-2004, 08:35 AM
I already did: REYFX.
Nah, that's a small-cap growth fund. If it beats USAUX, it will be primarily cause small-caps>large caps; the converse being true as well. The only meaningful comparison would be against another large-cap growth. That being said, i think you'll get owned over the next year or 2 cause small caps had their fun the past few years.
I have USAUX first and foremost because I wanted a large-cap growth offering. I consider the actual fund a far secondary to simply having the proper type of fund. Past performance doesnt equal future returns, and one's overall portfolio return rate is 90%+ determined by being in the right type of investment(s)/market capitalization/sectors, and a very small percentage maybe being allocated to which fund within a given sector you picked.
What the...? It is categorised as "Large Growth" but only has <12% large cap stocks in it. hmmmm...that explains its performance lately. I shall be looking for a replacement for it, for I wanted predominately large-cap stocks. Perhaps I will buy individual stocks instead. Good call.
USAUX has underperformed the S&P500 for the past ten years, annualised. Since '97, it has had only two good years relative to its peers, otherwise, it is a loser. It did get a new portfolio in April, but I would not be hopeful, given USAA's track record.
Perhaps we could find a better alternative?
My choices, in order:
TEQAX
JAVLX
PRMAX
UMLGX
azanon
06-15-2004, 11:44 AM
USAUX has underperformed the S&P500 for the past ten years, annualised. Since '97, it has had only two good years relative to its peers, otherwise, it is a loser. It did get a new portfolio in April, but I would not be hopeful, given USAA's track record.
Ack! we're going in circles. USAA AG's performance pre 02 is so irrelevant, i cackle at the thought. Not only has the manager changed, but quite literally the fund mechanisms changed with it. USAA AG actually used to be predominately a small cap fund, and even leveraged in some cases, before Marcisco. Besides the fund you liked (REYFX) only had one good year (03') and the rest were (even being kind) horrid.
Have you humored me yet and thrown up Janus Twenty from 87-97' (marcisco's fund for a decade)? You know, if you simply attached Marcisco Focus onto the end of that, he'd still have one of the greatest performing funds since 87'. Since (i'm assuming) he controls "Marcisco Funds" and USAA AG is a (near) mirror image of Focus, I think its a pretty decent move. You seemed concerned his hands may be tied, but only if he tied them himself given the fund company is his last name.
"Skill" is probably not as important for large-cap funds as small-caps anyway. Its not that difficult to buy Microsoft, Intel, Dell, Cisco, etc.
azanon
06-15-2004, 11:50 AM
Hmm, Janus Twenty opened back up? Yeah that is a tempting choice. I'm assuming cause they've had such massive outpouring of money from their market-timing scandels that went on.
D'oh! Nope, Janus Twenty is closed. heh, "All the best ones are taken!"
I looked at some of Marisco's funds and, well, they sucked. No wonder he works for USAA now. (heh, ouch) I do not want to invest in a "name", but in performance. Contemporary performance, not 80's performance.
Horrid? Whatdaheck are you looking at? (I am seriously asking)
azanon wrote:
"Skill" is probably not as important for large-cap funds as small-caps anyway. Its not that difficult to buy Microsoft, Intel, Dell, Cisco, etc.
That is a good point. If given enough money, I wonder if just buying some growing stalwart stocks is simply better:
You do not have the restrictions that fund managers have (no more than 5% in one equity, etc.)
You do not have to worry about turnover rate if you keep your stocks for the long-term, as you would the fund anyway
Why water down better quality stocks with lesser quality ones due to #1?
More focus = better return, more so for large caps, yes?
azanon
06-15-2004, 01:30 PM
I looked at some of Marisco's funds and, well, they sucked. No wonder he works for USAA now. (heh, ouch) I do not want to invest in a "name", but in performance. Contemporary performance, not 80's performance.
Horrid? Whatdaheck are you looking at? (I am seriously asking)
Using MSN investor quotes, i'm seeing 4 Marsico fund;2 are 4 star morningstar, 2 are 5 star morningstar. I think its safe to say morningstar disagrees with you. That's recent performance balanced vs risk; a logical consideration since failing to consider one without the other would be ameteurish.
What was I looking at you ask? Here's some reyex #'s: 2000, -40.7% return worse than 99%ile in peer category, 2001 -33.4% return worse than 90%ile, 2002 -42% return, worse than 98%tile. If i didnt know otherwise, i'd say you tried to find the worst fund possible, and if you didnt succeed, you got real close. As for 2003, everyone gets lucky every once in a while. He (shes) back to his old ways for 2004 (worse than 97%ile in peers according to MSN)
azanon wrote:
Using MSN investor quotes, i'm seeing 4 Marsico fund;2 are 4 star morningstar, 2 are 5 star morningstar. I think its safe to say morningstar disagrees with you.
What's with you and MorningStars? The guy who created it (forgot his name) even says that system is useless, rank in category is what is important. So, no, M* does not disagree with me.
If you must use M*, then be consistent: USAUX has only one star.
REYFX was #1 at the time of mypurchase. I should have dumped it when I saw it sliding (my original plan...why do I not always stick to my original plan!? guh!) Also, M* obviously has it mis-categorised. Note to self: check holdings to verify style box accuracy.
I think we must agree on screening criteria first before selecting funds. As for me, I do not look for best funds over the next ten years, for that, in my mind, is more difficult to speculate than what will likely be the top tier funds over the next year or two; it is a dynamic world.
azanon
06-15-2004, 02:28 PM
The guy who created it (forgot his name) even says that system is useless, rank in category is what is important. So, no, M* does not disagree with me.
If you must use M*, then be consistent: USAUX has only one star
I agree rank in category is very important. Seeing that you do as well makes me curious why you were poking fun at me using percentiles among peers as a benchmark in the past. That's the same thing is it not? Performance may be great, or it may be poor but that tells you very little until you compare to their peers because the investment type in general might have just been out of favor that year.
If morningstar is so useless, why is it, like, everywhere you look in the investment world? Risk vs performance isnt useless and considering generic scenarios tells you why. Imagine an investment with massive risk/high volatility that gave bond like ROI. If you only considerered the return, you may say, hey that beats T-bills so its good, but would that be wise if you have to endure aggressive, stock like volatility? Of course not. How bout the opposite "dream" scenario: steady, low volatility growth AND out of sight return. WOW The investors dream right? Not really. There really are some funds out there (large value in particular) that give quite low volatility and knock-your-socks-off return too. One that comes to mind is American Century's Large Cap Value (dont know ticker offhand). Those should be put on a high pedistle and that's exactly what morningstar does.
Re: USAUX's past performance, I guess I give up on trying to make you realize I put no weight in the former fund manager's performance numbers. Morningstar doesnt give ratings for less than 3 years, and Marsico's only been with USAA AG for 2 years. And for 3 years, USAUX is 2 star (whichgives a clue just how bad USAA AG was that year he wasnt there - considering its mirror, focus, is 4 star for 3 years).
azanon wrote:
I agree rank in category is very important. Seeing that you do as well makes me curious why you were poking fun at me using percentiles among peers as a benchmark in the past.
Because you would go back ten and twenty years. M* goes back only three years in its category rankings and ten years in its star rating. I believe, with very few exceptions, that the further back you go, the more true "Past performance is no indication of future results." becomes.
azanon wrote:
Performance may be great, or it may be poor but that tells you very little until you compare to their peers because the investment type in general might have just been out of favor that year.
That is the very reason why the * rating is utterly useless. It commingles all styles and all asset classes; it is not an apples-to-apples comparison. M* even says that.
azanon wrote:
If morningstar is so useless, why is it, like, everywhere you look in the investment world?
Please read with the precision in which I write. I never said M* was useless, I said the M* star rating was useless. The inventor of it will tell you that (I do not remember which of my books I read that.)
"Over-reliance on the stars--that is, considering only four-star and five-star funds--gets in the way of building a sophisticated, global portfolio."
-Mornigstar Senior Editor Jeff Kelly
"If you ask us, star ratings are overrated."
-Morningstar's own newsletter, Fund Investor
I like M*. It is on my IE links bar. It is the first place I look to investigate funds. I pay zero attention to the star ranking system. I fired a financial planner because she used "four- and five-star funds". (Well...and she used stochastics, which the inventor of that theory debunked it in the early seventies, and that was the final straw. Oh, and it was a USAA financial planner. McPlanning is what they should call it. I should have gotten fries with it, then at least I would have had something useful.) I have read over fifty pages on the star rating system and I even have the algorithm. Due to their influence on the industry, they had to come up with something.
azanon wrote:
Risk vs performance isnt useless and considering generic scenarios tells you why. Imagine an investment with massive risk/high volatility that gave bond like ROI. If you only considerered the return, you may say, hey that beats T-bills so its good, but would that be wise if you have to endure aggressive, stock like volatility? Of course not. How bout the opposite "dream" scenario: steady, low volatility growth AND out of sight return. WOW The investors dream right? Not really. There really are some funds out there (large value in particular) that give quite low volatility and knock-your-socks-off return too. One that comes to mind is American Century's Large Cap Value (dont know ticker offhand). Those should be put on a high pedistle and that's exactly what morningstar does.
Risk/Performance is valuable and beauty is in the eye of the beholder. Personal choice determines how important that is. Personally, I am not one who does not dislike volatility outright. In fact, I like volatility. I like risk. I like getting paid for taking those risks, as that is the whole premise behind any investment. Risk/Performance ratings are necessary in finding that sweet spot on the risk/return graph. Kiplinger.com had an awesome risk/reward scatterplot for funds, but they changed their site and took it out. It plotted risk/reward for the fund as well as all of its holdings, so you could see where the highest density was. It was mega-cool.
hehe...You said it well in chat, I have the "What have you done for me lately?" attitude.
azanon wrote:
Re: USAUX's past performance, I guess I give up on trying to make you realize I put no weight in the former fund manager's performance numbers. Morningstar doesnt give ratings for less than 3 years, and Marsico's only been with USAA AG for 2 years. And for 3 years, USAUX is 2 star (whichgives a clue just how bad USAA AG was that year he wasnt there - considering its mirror, focus, is 4 star for 3 years).
They just busted it down to one star a few months ago--well after Marisco took over. However, I do not pay attention to those, but you do, so you should not own that fund. :D
In 2003, USAUX did beat the category and S&P500 buy over 2% in returns. However, REYFX beat them by over 93% (and REYFX was one-star the entire time). So far this year, USAUX lost 1.7% (and demoted to one-star) compared to the index and REYFX lost 4.7% (and promoted to two-star)--not a terribly big difference, and certainly a better risk/reward ratio. Which would you rather have: a) +30.8% in 2003 and +0.1% YTD, or b) +121.9% in 2003 and -3.3% YTD? Personally, I want the first part of b and the 1.5% YTD provided by the index, but I do not have an accurate Magic 8-ball yet :), so I will have to get as close as I can. Don't you?
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Here are some questions I ask myself when shopping:
What kind of market do I expect over the next 3-12 months?
How has the fund been doing the past 3-12 months?
Does it capitalise on bull markets?
Does it handle corrections and down markets well?
If it makes outrageous gains, how much does itretain?
If a contrarian fund, does it know when it can't beat'em and therefore join'em? (I almost bought RSCOX, a contrarian fund, in January and am glad I didn't since it dropped with the rest of them. It served me well during the last correction, but missed this one for some reason.)
To look for anything strange and to get a general feel for the role of the fund, I glance at 2-, 3-, and 5-year performance.
I think this list shows my style and preferences. I would like to build on it and design a set of general parameters to make fund selection more reliable, objective, and efficient. If it's efficient, I'm more inclined to do it.
So, you gonna let go of that woobie there and help me, or what? :D
hehehehehehe
(It's all in good fun...an eff ewe, Rolo would be totally appropriate, as long as you're chuckling it up when you say it.)
Oh, and before you pounce on this, I did find out why REYFX was categorised "Large Growth" in spite of its holdings. It categorises the funds based on their holdings over the past three years.
Also, why is nobody else posting in here? :% Nobody else here has mutual funds?
azanon
06-16-2004, 07:21 AM
Because you would go back ten and twenty years. M* goes back only three years in its category rankings and ten years in its star rating. I believe, with very few exceptions, that the further back you go, the more true "Past performance is no indication of future results." becomes.
I prefer 3years. Didnt I say that before? Going back more than 3 is not as good. Looking at 3 months or last years winners is a typical ameteurmistake, because last years winners are quite often this years losers (cause theyprobably took risks toget there and possibly now own overvalued securities). Yet that'swhat you lookat.You're getting a present day lesson onthis conceptwith REYFX, aye? ;)
That is the very reason why the * rating is utterly useless. It commingles all styles and all asset classes; it is not an apples-to-apples comparison. M* even says that.
Treating investment categories as mutually exclusive is a mistake, in my opinion. There are some investments out there that the collective majority thinks are poor investments (options, commodities, precious gems, artwork). The risks never justifies the returns. If morningstar rated these, they'd all get "one star". In contrast, there are investments that the risk is more than justified (common stocks).
You can evaluate as broadly as above, or within stocks themselves, but comparing apples-to-oranges with your investment money is one of the wisest things you can do, cause the smart investor wants "maximum return" with the "least amount of risk" to get it, regardless if he has to, (god help us all), step out of a precious asset class. If you, instead, box yourself into a specific investment class (say, you want an internet fund) from the get-go, chances are you've already lost.
Please read with the precision in which I write. I never said M* was useless, I said the M* star rating was useless. The inventor of it will tell you that (I do not remember which of my books I read that.)
Oh I read with precision. My mistake was assuming you knew i meant morningstar ratings. I assumed you knew that I meant morningstar ratings since these are the specific things you see everywhere, such as on mutual fund ads, and the like. That is what they are famous and well known for. Everyone has stock evaulators like the one you're using at M*.
So the author of some book not written by morningstar's inventor claimed that he said the system was useless? Sounds like heresay to me. Also, sounds like "someone" doesnt like the way things are being run since he left or maybe was voted out, so he figured he'd slander then to "show them". A man slandering his own system sounds peculiar.
"Over-reliance on the stars--that is, considering only four-star and five-star funds--gets in the way of building a sophisticated, global portfolio."
-Mornigstar Senior Editor Jeff Kelly
A typical disclaimer. These are usually used for obvious legal reasons. Of course no one should "overrely" on anything. Thanks for saying nothing morningstar;).
"If you ask us, star ratings are overrated."
-Morningstar's own newsletter, Fund Investor
Nothing like the power of modesty. If anything, that did them more good than harm, so why not say it. Honestly, I agree, considering that's all you hear. However, admitted something is overrated to (you) claiming their inventorcalled it useless is a pretty massive leap. Which is it?
I fired a financial planner because she used "four- and five-star funds".
You pay for a financial planner? Ouch.
Morningstar is one of about50 things I look at. I dont discard any information but consider the collective whole. And I prefer to do most of the thinking myself (meaning no financial planner), short of picking individual stocks.
Personally, I am not one who does not dislike volatility outright. In fact, I like volatility. I like risk.
That volatility in and of itself is bad, is quite honestly not even a matter of debate. The things one should consider when considering any investment are its 1. stability of principle 2. stability of interest3. total return 4. protection against inflation 5. tax benefits (or lack thereof) Lowering, any of these, is a bad thing if it isnt offset by another factor(s) rising. Volatility, by its very defintion, cause #1 and often #2 to be lowered, but doesnt necessarily guarantee #3 will increase, so "liking" it in and of itself, is, with all due respect, a mistake.
I like getting paid for taking those risks, as that is the whole premise behind any investment. Risk/Performance ratings are necessary in finding that sweet spot on the risk/return graph.
You get paid if the risks translate into higher returns, but that is not always true as I have addressed above. "Risk/performance" is morning star ratings so make up your mind, do you like it or do you not? (performance=return).
They just busted it down to one star a few months ago--well after Marisco took over. However, I do not pay attention to those, but you do, so you should not own that fund.
Marsico focus is 5 star for 3 years, and USAA AG is almost a mirrorimage ofthat fund (compare the holdings list if you dont believe me). I keep checking my explanation on this for clarity, and it seems clear to me. In what way am I failing to help you understand this?
In 2003, USAUX did beat the category and S&P500 buy over 2% in returns. However, REYFX beat them by over 93% (and REYFX was one-star the entire time).
Gratz on finding last year's winner, and one of the worst funds i think ive ever seen. The fluke was 03' and what you can expect is everything else. I hate to see you lose your money. If my harshness contributes to you eventually selling this loser, then I think I did the greater good :D.
So, you gonna let go of that woobie there and help me, or what? :D
hehehehehehe
(It's all in good fun...an eff ewe, Rolo would be totally appropriate, as long as you're chuckling it up when you say it.)
Help you do what? Not sure i understand that, lol, but I am havin fun. :^
azanon
06-16-2004, 07:29 AM
Also, why is nobody else posting in here? :% Nobody else here has mutual funds?
They're probably afraid you're going to slander their funds, like you did mine.:dude:
You guys are too funny! I don't have any mutual funds currently, but my new lady is going to give me her 401K information and let me play with it. IF anyone has any advise, I'll gladly accept. My only experience now is with TSP funds. I'm assuming there will be transaction fees with her 401K, so I wouldn't want to buy-sell too often correct?
mlk_man wrote:
I'm assuming there will be transaction fees with her 401K, so I wouldn't want to buy-sell too often correct?
It depends, but probably won't. All of my transactions that I have made are free. I do not have enough experience nor huge amounts of money to move around to ignore fees. Plus, any tax-advantaged funds spent on fees would be a waste of that advantage.
Az, I'll reply when I am finished laughing, haha. :D
azanon wrote:
Help you do what? Not sure i understand that, lol, but I am havin fun. :^
hehehe, ya, this is fun and in-person would be a riot, I bet. I like pilsner, you probably like stout. :D
Help pick killer funds. Not that average crap, either. :l
azanon wrote:
I prefer 3years. Didnt I say that before? Going back more than 3 is not as good.
Yes, you did...somewhere in that tirade about how awesome Janus and Maisco was in the '80's or whatever. You just needed some Thompson Twins playing in the background. I got distracted by flashbacks of Anthony Michael Hall movies. Hel-lo! Welcome back...He's doin' The Dead Zone now...lol
Okay, so, putting our draft together, we agree on a 3-year history. I take it you treat all three years equally, or do you give any weight to more recent performance?
azanon wrote:
Looking at 3 months or last years winners is a typical ameteurmistake, because last years winners are quite often this years losers (cause theyprobably took risks toget there and possibly now own overvalued securities). Yet that'swhat you lookat.You're getting a present day lesson onthis conceptwith REYFX, aye? ;)
"possibly now own overvalued securities" - There is probably a lot of truth to that. However, my present day lesson still leaves me with twice as much cash as you! :P Money talks, so STFU....hehehehe...j/k.
azanon wrote:
Treating investment categories as mutually exclusive is a mistake, in my opinion. There are some investments out there that the collective majority thinks are poor investments (options, commodities, precious gems, artwork). The risks never justifies the returns. If morningstar rated these, they'd all get "one star". In contrast, there are investments that the risk is more than justified (common stocks).
Agreed. But the M* ranking does not take that into account. They specifically list risk/return and rate the two separately, and encourage users to pay attention to those instead of stars.
azanon wrote:
You can evaluate as broadly as above, or within stocks themselves, but comparing apples-to-oranges with your investment money is one of the wisest things you can do, cause the smart investor wants "maximum return" with the "least amount of risk" to get it, regardless if he has to, (god help us all), step out of a precious asset class. If you, instead, box yourself into a specific investment class (say, you want an internet fund) from the get-go, chances are you've already lost.
I wanted most of my portfolio to be Internet funds last year. Two of mine had a 100% return for 2003. Since I bought it in May, I made 100% in 9 months. I sold them this January, knowing that the best was likely over for a while. I have a very small position in Internet funds. I have it in my Internet company's SEP IRA. :D Also, Internet and technology I know best. When Peter Lynch hears "router" he would think of carpentry and that is why he missed the 18,000% cisco gain. I, however, am Cisco certified and even posess some Cisco equipment. Plus, tech is so hated, and that is frequently a good reason to invest in tech. My "tech" now is oil. Black Gold. Texas Tea. I wish I had jumped in it sooner. (One personal goal: To stop saying, "I wish I had jumped in sooner."!)
Sectors change for many reasons, and one of them is that they are cyclical. Sure, one can just stay invested in everything and they will always have something performing well to offset the lagging industries for fairly consistent growth. Since I am in a musical mood, I will mention something an old girlfriend said to me, "Superman's Dead. That's you." The chorus of that Our Lady Peace song, "Ordinary is just not good enough today". She understood me very well, very quickly, which is impressive.
My point is that if I am going to invest this much time into it, I want superior results and superior results is why I invest more time into investing. Plus, I get bored easily and I need to tweak and tune my investments to my satisfaction. My portfolio is not just an investment or my retirement. It is something that I have assembed and built, and I like to see it run. People who frequent investment forums such as this one may have a similar take.
azanon wrote:
Oh I read with precision. My mistake was assuming you knew i meant morningstar ratings. I assumed you knew that I meant morningstar ratings since these are the specific things you see everywhere, such as on mutual fund ads, and the like. That is what they are famous and well known for. Everyone has stock evaulators like the one you're using at M*.
Oh, sorry, my bad. I overestimated your intelligence then. (baha, ouch) You mean you take mutual fund ads seriously? Good G-d man!
Anyone with a working basic understanding of mutual funds understands that you cannot lump all mutual funds into a singular cookie-cutter rating of 1 through 5. That would be like rating all motor vehicles 1-5: SUVs, subcompacts, light trucks, exotic sports cars, all under the same star rating system. That simply would not work, but you could do it. Different vehicles have different objectives, different roles, different purposes. In any case, my PT Cruiser would have more stars than your Rex, so you would have to buy one. :u
Last year's winners you say? According to Morningstar's own data, of the 4- and 5-star rated funds in 1998, only 46% of them held their rating one year later, and only 31.5% retained their ratings in 2000.
"Past performance is no indication of future results" is not merely a legal disclaimer, it is a reality. Star ratings are based on past performance--that very thing you find "wrong" with my fund-picking. I look for trends, not historical performance. The fact is, 1-star funds historically had better performance than 5-star funds one and two years following those ratings, probably for the reason you stated. The Journal for Investment Consulting released studies on it, since you bashed Ric Edelman. Funny, you would agree with everything else he says, I'm sure.
azanon wrote:
I fired a financial planner because she used "four- and five-star funds".
You pay for a financial planner? Ouch.
I was starting out and I wanted something to keep me in check and to help ensure I didn't miss anything. It ended up being another reminder of why I am a misanthrope. :?
azanon wrote:
Personally, I am not one who does not dislike volatility outright. In fact, I like volatility. I like risk.
That volatility in and of itself is bad, is quite honestly not even a matter of debate. The things one should consider when considering any investment are its 1. stability of principle 2. stability of interest3. total return 4. protection against inflation 5. tax benefits (or lack thereof) Lowering, any of these, is a bad thing if it isnt offset by another factor(s) rising. Volatility, by its very defintion, cause #1 and often #2 to be lowered, but doesnt necessarily guarantee #3 will increase, so "liking" it in and of itself, is, with all due respect, a mistake.
I like getting paid for taking those risks, as that is the whole premise behind any investment. Risk/Performance ratings are necessary in finding that sweet spot on the risk/return graph.
You get paid if the risks translate into higher returns, but that is not always true as I have addressed above. "Risk/performance" is morning star ratings so make up your mind, do you like it or do you not? (performance=return).
1-2 Punch:
You merely repeated what I had said. You cannot split my paragraph and try to refute my argument by eliminating the context. That tactic is akin to starting the bilge pump. :s
It wouldn't be called "risk" if it were guaranteed, now would it?
BAM!
(hehe, Alzar is on Futurama right now.)
azanon wrote:
Marsico focus is 5 star for 3 years, and USAA AG is almost a mirrorimage ofthat fund (compare the holdings list if you dont believe me). I keep checking my explanation on this for clarity, and it seems clear to me. In what way am I failing to help you understand this?
Stars belong on little children's foreheads. :*
Both of those funds are craptacular.
azanon wrote:
Gratz on finding last year's winner, and one of the worst funds i think ive ever seen. The fluke was 03' and what you can expect is everything else. I hate to see you lose your money. If my harshness contributes to you eventually selling this loser, then I think I did the greater good :D.
Shooooosh! My inclination to ditch REYFX is the reason I started this thread. I think I will replace it with stocks, though.
My owning REYFX is one of the reasons why I will be running 13's in my PT Cruiser before you in your STi. :u
For funds, I would recommend the Vanguard index funds. The rates of return are decent in the long term, and they provide some of the lowest fees around. Fees are incredibly important, since just a 1% difference can eat away many thousands of dollars in a few years - thus nullifying any advantage you might get out of a stronger-performing fund in the short term.
tsptalk
07-06-2004, 11:00 AM
Welcome Mike! Thanks for the info.
Tom
Welcome, Mike!
I hate average. The more I trade stocks, the less I like funds. Especially index funds.
So far, my index-predicting leaves a lot to be desired (read: sucks :D) since I have not followed indexes until recently. My stock predicting is another story, they always do much better than the indexes. Today, for example, the NASDAQ is :{2.2%, S&P500 :{0.8%, Wilshire 4500 :{1.27%.
My stocks, from largest to smallest positions, are VLCCF :}5.2%, TASR :}0.5%, NAT :}3.3%, TNP :}0.3%, XMSR :{2.0%, SIRI :{3.7%.
Funny, I have been feeling that I should have sold the last two last week, but I convinced myself that I am holding them for the "long term". Perhaps I should rethink that and trade in and out of it like I have other stocks.
XMSR has a nice pattern and I think it may break out, but thenegative EPSmay preclude that; it is hanging by a thread in my portfolio. SIRI was steady and today's drop was a surprise; I never expected it to drop below $3.
Anyway, back to my point. I hate average and do not wish to settle for it. If I, as a newbie, can trounce the market, I certainly expect a professional to do so. However, after reading Peter Lynch's book, I think SEC regulatory encroachment may make consistent outperformance very difficult. (The book did not directly give me that impression, but a glimpse into how fund managers must operate caused the inference.)
I would gladly pay a premium fee to get superior results. I have never gotten ahead in anything by going on the cheap; in fact, the few times that I have skimped, it cost me. On an average day, I'll definitely pay 2% for a 20% return rather than 0.2% for an 11% return.
I have one fund left in my regular brokerage account, REYFX. Its downtrend seems to have ceased, so I will hold on a while longer, however, I do not see myself buying another fund to replace it. I still have funds in my IRA's and am entertaining the thought of transferring them over to Scottrade for some serious tax-deferred trading.
Basically, I am looking for compelling funds to give me a reason to not actively trade in my IRA's.
The high fee funds want you to think that they are delivering higher quality. However, studies have shown the opposite to be happening. Quite simply, it's a rip-off in many cases. When you are talking about tens of thousands - or perhaps hundreds of thousands of dollars, just a slight bump up in fees can really take a bite out of your retirement earnings. If you wish, I could track down some very well-written articles on this subject and post the links. I'd certainly consider them recommended reading for any investor.
If you don't want to go the Vanguard route, my next suggestion is to look at Morningstar's site. They have a very handy ratings system that tells you which funds are doing well and how they rate compared with each other in fees and other things (such as short-term / long-term performance).This allows you tofind both performance and low fees, which is the best of both worlds.
Of course, most of these things have a pretty sizable minimum investment requirement, so as a young investor, I can't take advantage of them - yet.
I'm generally not a big fan of stock trading - unless you really know what you are doing, you can easily get burned on it. Plus there's the trade fees and commissions to deal with, which pretty much force you into buying/selling a lot of shares at once to make the transaction worthwhile... which means greater risk.
Edit: sadly, the articles I read are now in the online archives and cost $2.95 to view each one. :(
However, here is a recent one that is free. The site may or may not ask you to register to view it, though.
http://www.twincities.com/mld/twincities/business/columnists/gail_marksjarvis/8978869.htm?ERIGHTS=-2604827108238647492twincities
Basically the author makes the point that index funds are beating 80% of active mutual fund managers (the stock pickers). She also mentions something interesting that you may be interested in: exchange traded funds (EFT's). These are index funds that can be traded like stocks, andsome of theseencompass smaller portions of the economy (like biotechnology). Some food for thought.
cougarcash
07-15-2004, 07:02 PM
I like the Ariel Appreciation Fund (CAAPX) and especially the Ariel Fund (ARGFX). I've had the Ariel Fund for years and have been pleased.
I'll look at those two tomorrow.
Today I did what I should have done two months ago. I exchanged RIAFX for RSCOX and RSNRX (RS Contrarian and RS Natural Resources). My other holdings in my Roth are DRBNX (I thought biotech would grow by now, but wait...for...it...) and RSPFX. I think I need to spend some time doing a refresh on it.
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