What are the main arguments of Canner, Mankiw and Weil's "An Asset Allocation Puzzle? That is, why are investment advices inconsistent with Mutual fund theorem?
207007
Basically, traditional investment advice ignores the impact of equity diversification on the reduction of risk. Correlation and volatility are persistent qualities of most well-managed mutual funds. Thus, the right mix of equity funds could be less volatile, and have more return, than a mix of bond and equity funds.\n\nThe tools to research this concept can be found in the free FastTrack trial at http://www.fasttrack.net
525091
As of Today,,according to Yahoo Finance...\nThe Top 10 mutuals return:\n\n3Month> 23.7% to 36.6%\n1 Year>  60.6% to 75.5%\n3 Year>  45.9% to 50.6%\n5 Year>  37.9% to 47.8%\n\n........................................\nYahoo's Screener returns these results\n\n"All>Down more than 50%>Year to Date"\n1 Fund)  --85.7%\n\n"All>Down more than  10%>1 Year"\n25 Funds--- Range  -10.3% to -88.9%\n\nHowever,,that 88.9 Loss is a sorta exception.\nThe Next Loser on that list is -34%\n#11=  -17%\n#12=  -13%\n\nThere are Only 5 showing ,,Down more than 25%\n\nAnd only 179 showing "Down more than 0% 1yr"\nWhile there's 16,643  "UP more than 0% 1yr"\nWith 13,433 "UP more than 5% 1yr"\n..........9,762 "Up More than 10% 1yr"\n\n\nSo,,of Over 16,500 Funds,,,,\n25 are Down More than 10%\nvs\n9,762 UP more than 10%\n6,061 Up more than 15%\n\nFrom that simple comparrison it seems a safe assumption that a "Dart Thrown" amongst ALL Mutual Funds could be expected to return 10% or better\n>>>>>>>>>>>>>>>>>>>>>>>>\n\n"Worst Case"....???\nOnly 25 of more than 16,000 are Down more than 10% in current 1 yr period AND 3yr period\n\n51 are Down more than 10%,,Y-T-D\n561 of 16,600+ are Down More than 0% YTD\n\nThat's 30:1 Odds of hitting a Gainer larger than +0%,,,\non nothing but a Blind Grab.\nA LITTLE research can be expected to better those Odds exponentially,,in my opinion.\n\nOk,,we all are familiar with the saying,\n"Past Performance is No Gaurantee of Future Results".\nEZ enough to understand that.\n\nYet on the Other hand,,according to both Market Logic and Common Logic it's a valid Assumption that \n"IF the Fundamentals Underlying a Fund's Performance remain basically IN TACT & In Effect,,,,,\nThe Fund's Performance Model will be approximately replicated."\n\nPut Another way,,,If most all things remain equal about the Fund,\nIt's Reasonable to expect the Fund  to perform in a Similar manner.\n\nIt Might have done +20% last year,,,if things stay Similar,,\nOne could reasonably expect a +10 to 20 % range as a basic assumption.\nA Drop from +20% to +10% is a HUGE Correction Factor to include in any assumption of "all things remain equal"--the basic fundamentals being maintained.\n\nLets apply that to a couple of examples:\nGold and Oil both have about TRIPLED in last 3~4 Years.\nObviously,, Funds weighted in Those Now Reflect  That RISE.\nActually,,they reflect Commodity Pricing + Actual Enterprise Value +++INVESTOR SENTIMENT>>Momentum.\n\nBut can Anyone in their right mind think that Gold or Oil will TRIPLE AGAIN in next 3 yrs or so?\n200$ to 600$~700 Gold,,,,OK,,,but $650 Gold to $1,950?\n$20 Oil to $60's,,Sure,,but From HERE Forward..$60's to $180's??\nWithin next 3~4 years??\nNaaa,,No Way.\n\nSo we CANNOT Logically assume Gold or Oil will "repeat" the Performance of it's current 3yr and 5Yr record.\nIt can CERTAINLY Do Very Well,,,but it's Recent Performance is an Anomaly,,,a Unique Situation.\nAND,,it was (arguably/Probably) coming from a UNDER-valued position----it had a Latent/Dormant UNrealized Value which accounts for a substantial %% of it's Upward Move.\n\n\nNow lets look at DEFENSE SECTOR for a example contrary to Above.\nDefense itself had a Windfall UP-Move.\nWe CANNOT (Or at least HOPE NOT) expect the\n MOTIVES/MKT- Forces to REPEAT.\n\nBut even so,,,the Fundamentals of The COMMERCE of Warfare/Defense  remain Intact,,,and are expected to do so thru next several years.\nThe DEMAND for relative Products/Services is not only Still Growing,,it's EVOLVING.\n"The Big Picture" of DEFENSE is one of GROWTH.\nWhich means Growing Sales/Revenues/Profits,,,it means Innovation,,,it means Mergers & Consolidations..\nBlah,Blah....\n\nSo if we Compare something like Gold &
543050
The best returns come with the higher risk.   Mutual funds are usually poorer returns than you get from picking the rights stocks because someone is taking a portion of your profits to supposedly reduce your risk.  You pay for returns in risk to your investment (for stocks etc) or in frustration cost (rentals,  owning your own store etc).  \n\nRental property is my preference,  as long as your careful and check things out well (ie actually checking for places to rent to confirm comparable rental rates etc).  Over the long term it's one of the best lower risk investments you can get, but it does take your time and effort.
184020
Mutual funds do not "default," it is not a term applied to mutual funds.  However, the mutual fund can invest in something, like a bond, where the issuer defaults.  Then you the investor lose money.
622845
I think this is an excellent question. Since about 10 years ago I made a decision to act as if everyone would act as I do so as to steer the world toward what I would call an ideal world. I think usually people act only for themselves and this steers the world toward nothing that anyone desires.\n\nInvesting is a big part of this. I think most people don't give any thought to what their money is doing and the power they have as an  invester. No thought is given to "who they are helping out" and all the thought is about "how much money can I make".\n\nON THE other hand, trying to make money in general benefits society by making things more efficient, inventing new things people want or making things more cheaper or improving distribution. This reminds me of my favorite book, Atlas Shrugged by Ayn Rand. Wanting more for yourself helps society as long as you don't lie, cheat, or steal. Still, if this self-serving action is directed with a conscience at the directive in the first paragraph, the world improves much more I think.
225546
Systematic Investment plan is like Dollar Cost Averaging.\nYou invest the exact same amount each month, no matter what the price per share of a mutual fund is.\n\nFinding value of your portfolio in the future is not possible. However, you can find a hypothetical value. All you need right now is a hypothetical interest rate (say around 10%) and see what you can get in 3 years.\n\nI would invest in aggressive growth funds.. particularly Legg Mason Partners Aggressive Growth Fund (formerly known as Smith Barney Aggressive Growth).
444273
net assets has to equal equity.  check your other comprehensive income accounts. that could be the source of your error.  it includes such things as some derivative costs, foreign currency gains and losses.  (sorry, i'm assuming u.s. accounting.  don't know if you use this concept in u.k.)
403449
1) The minimum investment in mf-mis is varied from amc to amc.If u want to invest in growth option the amount is arround Rs 10000/-.But if u want to invest in monthly dividend option the minimum amount is arround Rs25000/-.\n2) No the monthly dividend is not assured.It may fluctuate,may not pay every month.\n3)Very good question.This is as per your risk return appetite u should compare it which 1 is best for u.If u are a tax payer then mutual fund-mis is the best option for u.if u invest in growth option only long term capital gain tax is applicable to u.But if u invest in mly/qly/yly dividend option dividend is tax free in the hands of u but amc have to pay tax to government.So growth option is the best for absolute return.U may opt for systematic withdrawal plan.In the case of pomis it is assured @8% to u.but interest is fully taxable.
372511
Do I have to make a choice?  In a few other posts, I have pointed out the disadvantages of investing in mutual funds.  It is exceptionally rare that any mutual fund will outperform its benchmark over the longer term, especially after fees and taxes are factored in.  \nI'm going to assume that you're asking this question b/c you are only given Calamos funds as options in your 401K and that you have to pick one.  Without knowing your specific financial circumstances (which is critical to find the most appropriate fund) I will give you two Calamos recommendations.  I just checked out the prospectus online and it looks like the Global Growth and Income, and to a lesser extent, the Growth and Income fund, are pretty decent.  Both have consistently beat their benchmarks and the fees are amongst the lowest of all Calamos funds (although I'm still shocked at how high the Calamos fees are overall).  These funds should be good and would be most appropriate in a tax-deferred account like a Roth 401K where the taxation of the dividend income and capital appreciation will not eat away at returns.  Steer clear of the Growth fund.  These guys are making a huge bet in Tech and must not be historians of the market.  They should look at what happened to Janus funds in the late 90's and they might reconsider a 34% allocation to technology.\n\nThat's my $0.02.
497595
This question belongs in the Philosophy section.  Investing is about making money.  If you confuse the two, then you are asking for trouble.
403603
Mutual funds are appropriate for some and the wrong investment for a growing number of people.\n\nFor me, I would NOT invest in mutual funds if it weren't for having a 401K. \n\nOverall, Mutual funds are not good (once you're educated in investing) and many people should not invest in mutual funds unless you have to (like if it were a requirement in a 401K).\n\nHere's why.\n\nFirst of all, mutual funds exist to take average person's money.\n\nSecond, mutual funds seem to be "happy" just to do better than the S&P index, since that's often the gauge. A monkey, yes monkey, can usually outpick most mutual funds. Over 60% of the mutual funds out there can't even outperform the market (CNBC just reported the current # was 72%). That's VERY SAD!\n\nThird, mutual funds have embedded management fees in their costs. Most of these mgmt fees are 0.5% to 2% annually.\n\nFourth, most mutual funds exist not to earn you a lot of money, but are more interested in NOT "losing" you lots of money. That way you stay with them and they continue to collect their fees.\n\nFifth, mutual funds are not as liquid as one might think. If you're in mutual funds and a Bush talks in the morning and you call your broker to sell because the market is now tanking, the broker will gladly take your order, but the order will not be executed until the day is over and the negative impact is already priced into the fund.\n\nSixth, many mutual funds charge extra "fees" if you buy/sell their fund within a certain amount of time, meaning you must keep your money in the fund 90 days to 2 yrs before you're free from the fees (read the fine print on trying to get a withdrawal). These fees can be up to 3% or so of your money as well.\n\nSeventh, mutual funds have to be in the market. So if the market is crashing or going down like it has between May and now, then the funds still have to be in the market and taking those losses too. With some practice, you can time your monies to avoid some of those losses (it'll take practice).\n\nConvinced yet? Need more? \n\nEighth, mutual funds have to be pretty diversified and so if there are hot and cold sectors, they are probably in both the hot sectors and cold sectors. However, as an investor, you can buy into just the sectors you want, like metals, or housing, or energy, etc. or right now, Brokers/Dealers, Retail, and insurance!\n\nNinth, mutual funds are so big, they can only invest in certain companies. A small mutual fund with $10 billion in assets. 1% of that money is $100 million. How many companies are this big where $100 million investment isn't the whole company? Do you want to limit yourself to just those larger companies like Times Warner, Microsoft, home depot, cisco, ebay which have been sideways for years? I think not.\n\nA better way would be to buy ETFs (exchange traded funds) or holders. These trade like stocks, so are very liquid, and do not have the high fees like the mutual funds. Further, you can buy/sell them as you wish. They represent sectors or indexes, so buying them gives you the same diversification as the sector/industry/index, but with much less overhead!\n\nSee Amex.com (american stock exchange) or ishares.com, holders.com for more info. \n\n\nYou need to invest for yourself. If you can't, then sure, use mutual funds. But be aware of the shortcomings (and as you can see, there are many). \n\nLet me know if you have further questions. \n\nBest of luck!
77029
Unlikely that kind of growth in mutual funds.  They are for safe, slower growth investing.  You would need something volitile, like oil stock to make that much money that quickly, and you stand to lose money that way.
488994
Your investment is in an IRA so there won't be a taxable distribution (unless you pull the money out of the investment).  Sometimes there can be account closure fees that mutual funds may charge or the financial institution you are working with.  If you are in a bad investment, it can be worth any fee to move into a stronger investment.  Look for long-term results rather than just the past 3 or 5 years.  Good Luck.
672656
If you could only realize how silly this question is, you would not try to sound like you know something about investing. Nor would you pose a question with so many unlikely decisions already made.\n\nFirst, "doing well" is subjective; different for everyone. If you cannot be specific, you just don't get it. Investing and trading is precise, not general. Like, how much steel should I use in this building, in general?\n\nSecond, in all of the plans you've made in your life, how often does it work out as planned? Almost never, right? Something's always a little different than the plan. So, how much money you "expect" to make is irrelevant.\n\nThe sad part is, that you "expect" to make money at all, from knowing nothing at all about what you're doing. It just doesn't work that way, or am I the one being silly? \n\nThird, you are focusing on profits, exactly the opposite of what you should be focusing on. The number one rule of investing is capital preservation, which means managing risk and losses first, then if you don't lose it all, profits will come eventually. Warren Buffet's #1 Rule, "Never lose money." Making money comes after you learn something. Making sound investment or trading decisions requires more than a click of the mouse. Cheap and easy does not equal successful trading or investing. Nothing substitutes for research and education. It is a burning desire to achieve mastery that produces success, not a burning desire for money.\n\nFourth, a "good" stock is subjective; different for everyone. What exactly do you mean? "Good" stocks lose money every day.\n\nFifth, if you invest "$2000 into seven stocks," either you're talking about penny stocks, or just a few shares of each one, and just from the initial hit of commissions on seven stocks will put you down by !0% before you ever begin. The $2,000 is barely enough to buy a hundred shares of one "good" stock, let alone seven. If you buy 100 shares of IBM, that will cost you $9,000. Don't even think about penny stocks, where manipulation is rampant and companies come and go faster than you can keep track of them.\n\nYou have quite a bit to learn before you can post a relevant question. Stick it in the bank, and count yourself lucky to have $2,000.
276631
You didn't say how large the overall portfolio is, which is a key issue, but I can understand not wanting to feature your entire financial life on a public message board.  In general, mutual funds are ideal for people with small portfolios, say under $25000, because it allows them to get diversification that they couldn't afford any other way.  Once you get past $50,000, or $100,000, mutual funds become much less attractive.  At those levels, there are independent financial advisors who could handle your portfolio for less than you'd pay a mutual fund in fees, and  provide much more individualized service. (We'd be happy to talk to you if you're interested) Plus, you'd have a large enough portfolio that you're effectively able to diversify on your own, without the need of mutual funds.\n\nIn general, my impression of mutual funds is that they're all pretty average.  I almost would feel silly commenting on 'good' or 'bad' funds, because they are normally all so close together that it's not incredibly relevant.  Further, their investment strategies often change overnight, and you have little way of knowing until after the fact, so really, your guess is as good as mine.  Basically, you can look at their past results (over the long-term, not just the past year) to get an impression of their management ability, but that doesn't give you any true indication of the future, so it's largely estimation.\n\nStocks, on the other hand, can be judged more concretely.  Of course, we can never know for sure with them either, but at least we have something concrete to look at.  So:\n\nI'm a big fan of IACI.  The future looks strong, and the assets are valuable.  Definitely hold on to this one for a while.\n\nMSFT: Boring!  I dunno what's up with Microsoft, but it's been among the most uninteresting stocks for at at least the last half dozen years.  I suspect it's a size issue.  There comes a point where it's difficult to grow without cannibilizing your own sales on another product.\n\nHLT: Not sure what the attraction is here.  If you've held this for a while, perhaps you've gotten a nice profit already.  Can't say if it's at its end yet, but it's definitely not something that I'd be buying right now.\n\nECA & BHP: Resource stocks like these are definitely popular right now, with good reason.  I think there's still more upside here, but these are definitely not long-term plays.  It's hard to say exactly when you ought to sell this type of stock.  This is just a situation where you have to observe the world and the industry on a consistent basis, and make the assessment over and over.  But, for now, I'd say hold on.\n\nYou didn't ask for stock recommendations, but if you're interested, I'm a big fan of MI and TMX right now.\n\nBest of luck to you.\n\nP.S.  I've included a link to a story that disagrees with me on Microsoft.  Who knows...maybe there's some value there after all.  But I'm still not convinced.
420382
It's only common sense. It is better to get 50,000 (more money) in the first year so that you can invest it elsewhere for additional profit, than to have 10,000 (less money)in the first year.  Money has time value. A dollar in year one worth more than a dollar in year five. Mathematics calculation only confirm this common sense.
281184
It's actually D.  A isn't correct because we aren't given the covariance between the two securities.  The portfolio risk is not the simple weighted average of the individual risks. \n\nThe formula is\n\nsquare root of the sum of the weights multiplied with the covariances.\n\nIf the securities are negatively correlated, the total risk can be less than either of the individual securities.  If they're positively correlated, the portfolio risk goes up.