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abagofcheetos posted:Besides, even though CGMFX underperformed the last two years it still ended the decade providing over 200% greater returns than VIGRX (and there was a time when it was near 500%). Don't you see the inherent problem with this? When it was providing these great returns, nobody knew about it, only after an actively managed fund provides these big returns do people start jumping on the bandwagon...and that's when they could stop providing the big returns. Do you think a decade ago, Cramer was on TV screaming to get in on CGMFX? Only after the fact.
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Jan 15, 2010 18:03
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80k posted:At the end of 2007, a certain individual on this forum challenged me with a bunch of managed funds that he expected to continue to outperform its category.
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Jan 15, 2010 18:13
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80k posted:Also... one thing to watch out for, regarding FAIRX, is asset base. It is not the same fund as it was earlier in the decade. Probably still a very good fund but asset bloat could become a problem. Don Wrigley posted:Don't you see the inherent problem with this? When it was providing these great returns, nobody knew about it, only after an actively managed fund provides these big returns do people start jumping on the bandwagon...and that's when they could stop providing the big returns.
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Jan 15, 2010 18:14
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abagofcheetos posted:Ok I agree with all of this but how does any of it make CGMFX any less of a fund? Chasing performance is always a losing venture but I'm not advocating that. To me it doesn't make it any more or less of a fund. Think about it this way, though I don't 100% agree with this assessment. If there are 10,000 large-cap blend mutual funds, they will on average match the fund minus expense fees on any given year. Of course there will be deviation from this mean, they won't all perform exactly the same, some better some worse. What if one performs better for 2 years in a row? 5 years? 10 years? Take it another way...what if you're flipping a coin, and one of 10,000 people flipping a coin. What if you flipped 2 heads in a row? 5 heads? 10 heads? The point is, the one that outperforms over a 10-year stretch is going to be the one you hear about, but at the beginning there was no way of knowing about it. This chalks up a lot to luck--and as 80k said before, deploying certain strategies could make a fund outperform for a reason. But whether by luck or skill, past performance is no indicator for future success and since it's already over and done with, is really not even worth taking into account.
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Jan 15, 2010 18:18
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abagofcheetos posted:Ok I agree with all of this but how does any of it make CGMFX any less of a fund? Chasing performance is always a losing venture but I'm not advocating that. It doesn't. I am not picking on the fund... I have never read a CGM shareholder report nor intend to. When someone comes in bragging that he can pick winning active funds, and ALL of them subsequently underperforms for a period of time, it says something about investor overconfidence, moreso than it says anything about the funds in question. duke is a decent guy, and I bet he got out of those funds since I believe he split with his broker. Good thing too, since his broker was a piece of work. His broker was all "lol treasuries" against me in 2007. Well, 2008 turned out to be a flight to quality of epic proportions... the most dramatic we've seen in several generations. Vindication doesn't get any better than that. I should add that Duke specifically wanted to come back after a couple years to revisit the performance of those managed funds. I'm not bringing this up just to be an rear end (though that is admittedly part of the reason).
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Jan 15, 2010 18:39
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Not to really derail this thread much more because it is a really great resource, Don Wrigley: I hear what you are saying, I know that it's remarkable performance is the only reason people know about CGMFX, and that performance chasing probably burned a lot of people on it. The past ten years could have very well been an amazing string of luck by Heebner, or it could be that his hunches and ideas on trading are simply that good; there is no way of truly knowing. But I feel given how he does things and his past efforts, that there is the potential for him to have good years again down the road. Will he? I have no idea. 80k: Yeah duke was kind of annoying, he really did think he had it all figured out. I'd rub it in his face if I were you too.
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Jan 15, 2010 22:34
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80k posted:At the end of 2007, a certain individual on this forum challenged me with a bunch of managed funds that he expected to continue to outperform its category. You guys still on each other?
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Jan 16, 2010 02:41
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Anyone have any personal recommendations for a broad-based commodity ETF?
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Jan 16, 2010 04:11
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This is probably basic but the wikipedia article didn't seem to say... If I have a 403(b) plan through say, Vaguard, would I get to pick how the money was invested? Or do I have to just pick a standard plan? (Just read 4 Pillars of Investing, working on Random Walk Down Wall Street, and both have left me very distrustful of any sort of managed fund - I'd much rather have a bunch of index funds from various markets (US, emerging, far east, etc)
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Jan 16, 2010 06:05
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Your 403b is through your employer. My employer lets me pick from a wide range of funds, some of which are at Vanguard. Normally you can use any of all of the funds your employer makes available, but not any others. Pretty much the same as a 401k. Also, these guys: http://www.403bwise.com/
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Jan 16, 2010 06:19
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Evil SpongeBob posted:You guys still on each other?
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Jan 16, 2010 07:18
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Ravarek posted:Anyone have any personal recommendations for a broad-based commodity ETF? DBC. Just make sure it is in a tax sheltered account.
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Jan 16, 2010 08:54
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Ravarek posted:Anyone have any personal recommendations for a broad-based commodity ETF? I've used PCRDX for a few years, though DBC does have a better ER. PCRDX is a TIPS-collateralized fund, and DBC is probably a better pure play. I'm not really much of an expert on commodity funds, though.
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Jan 17, 2010 02:27
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Unormal posted:I've used PCRDX for a few years, though DBC does have a better ER. PCRDX is a TIPS-collateralized fund, and DBC is probably a better pure play. I'm not really much of an expert on commodity funds, though. From what I gathered, Pimco's collateral strategy is a fully actively managed bond strategy that tends to favor TIPS (but cannot really be considered a TIPS-collateral version of a DJ-AIG commodity fund). So you will get some corporate, foreign, emerging market bond exposure, in both nominal and inflation linked versions. That said, I like it and currently own PCRIX (institutional version).
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Jan 17, 2010 03:30
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moana posted:ESB, where have you been! I was just rereading your personal finance thread in the archives to help with a new beginners thread. There were some crazy fights over passive/active investing in there. Lurking in the shadows for quite some time. (And I had two megathreads in there...  )
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Jan 17, 2010 17:49
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Evil SpongeBob posted:(And I had two megathreads in there...  You and 80k are the reason I opened up a Roth and started investing for retirement, so I owe you a great deal of thanks (and also some thousands of dollars of interest when I retire).
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Jan 17, 2010 19:03
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moana posted:Well, aren't you SPECIAL I tell you what. Make it part of the subforum rules that 80k & I can troll anyone, anytime and I'll consider it even.
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Jan 18, 2010 16:06
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Not fair: 80k has too kind of a heart, I don't think he could troll BFC if someone put a gun to his head. Here's my offer: - Avatar changes for you two until I retire - You can troll me anytime you want  - Come visit San Diego and I'll buy you drinks until you start talking about investing in gold bars
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Jan 18, 2010 16:20
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I'm a 24 year old Canadian earning about 33k after tax at a reliable job. I have very low expenses and no dependents. I've been saving 80%+ of my paycheque for the past year, so I have about 35k that needs to be properly invested. Two-thirds of that is sitting in a Canadian Bond Index and the other third is idling in my chequeing and brokerage account. I currently bank with TD and I'd prefer to use their TD e-funds to keep as much in one place as possible. They're a collection of index funds with relatively low (for Canada) MERs of 0.31% to 0.5%. They conveniently have no trading commissions, as long you leave your money there for 90 days. https://www.tdassetmanagement.com/Content/Products/MutualFunds/Funds/p_FundTable.asp?PID=10&SI=4 I was hoping to see what you all think I should do from here. I've obviously been a big scaredy cat for the past year and I've been feeling really hesitant to commit to a course of action. Is going with the efunds a bad idea (as opposed to ETFs through a discount brokerage)? Should I go for the currency neutral funds? Would it make the most sense to just carve the money up into 25% bonds, 25% Canadian, 25% US, 25% International? This money is for retirement, so I have a 40+ year time horizon. On one hand, it makes me feel like I should just do it and carve it up. On the other, I feel like it might be unwise to go heavily into stock after such a strong rally, you know? market timing! 
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Jan 18, 2010 16:39
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My father in law opened up a Roth IRA for my wife at American Funds, and put some starter money into it. My wife wants to contribute to this account to make her dad happy, but I was trying to tell her that even though I think she has some decent funds, the expense ratios aren't worth it. So how do I prove this to her? My main question is if I add the two funds to, say, Yahoo Finance, and do a comparison, do those gains take into account the expense ratios? What about the front-load fee? If not, is there any way to do that? The specific funds she has are: AGTHX ABALX AMRMX AIVSX Thanks!
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Jan 18, 2010 18:51
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http://www.bankrate.com/calculators/retirement/mutual-funds-fees-calculator.aspx
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Jan 18, 2010 18:53
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Strict 9 posted:So how do I prove this to her? My main question is if I add the two funds to, say, Yahoo Finance, and do a comparison, do those gains take into account the expense ratios? What about the front-load fee? If not, is there any way to do that? Expense ratio, yes. Front load fee, no. Distributions (dividends and capital gains), no. Better to use Morningstar to compare performances (as distributions are included). Though you still have to adjust for the front load. The Load is the problem as the ER's are generally reasonable. If your father-in-law is opinionated on investing, it will be tough to convince him that indexing is superior. American Funds have a loyal following. They are a well run organization and the funds have generally had consistent outperformance. Are you willing to bet 5.75% of your money that they will continue to outperform? That is the question.
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Jan 18, 2010 19:05
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Also, if you hold the fund for a significant period of time (which I would assume she will be doing since it is an IRA) that 5.75% has less and less of an impact on the total ER you have paid them.
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Jan 19, 2010 00:57
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Thanks for all the info. It looks as though if she has to be in a fund, those ones aren't too bad, and maybe not worth getting into a discussion about with my father-in-law. EDIT: Just one more follow up question. If I make a portfolio on Yahoo finance with a deposit of $1000 in a few funds, subtracting any front-loaded fees, it still won't be accurate because of the varying dividends of each fund. Is that correct? Strict 9 fucked around with this message at 17:26 on Jan 19, 2010 |
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Jan 19, 2010 16:02
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abagofcheetos posted:Also, if you hold the fund for a significant period of time (which I would assume she will be doing since it is an IRA) that 5.75% has less and less of an impact on the total ER you have paid them. That is one way to look at it. Another way to look at it is the longer you hold it, the more that 5.75% amount you paid has compounded. It is a substantial amount of money thrown away that provides you no benefit. Strict 9 posted:EDIT: Just one more follow up question. If I make a portfolio on Yahoo finance with a deposit of $1000 in a few funds, subtracting any front-loaded fees, it still won't be accurate because of the varying dividends of each fund. Is that correct? Correct. Capital gains distributions vary widely between funds, so those will be an even larger source of discrepancy than dividends.
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Jan 19, 2010 18:21
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80k posted:That is one way to look at it. Another way to look at it is the longer you hold it, the more that 5.75% amount you paid has compounded. It is a substantial amount of money thrown away that provides you no benefit.
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Jan 19, 2010 21:13
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moana posted:Not fair: 80k has too kind of a heart, I don't think he could troll BFC if someone put a gun to his head. Here's my offer: Deal. Forewarned, I'll destroy a Hash House meal.....
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Jan 20, 2010 02:01
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Hey guy, I was wondering if you could give me your (more expert than mine) opinion on what I should do long term with my money. Most books on investment that I read suggest matching your employer's 401k contribution, maxing out the IRA (two of them apparently?) and then maybe invest in a couple of other means that you can defer taxation on. The issue with that is mostly that it prevents you from pulling any of that sweet cash out until you're 60, which is not cool. The second issue is that not being a US citizen or resident, I have no idea how long I'll be in country, meaning that investing a fat chunk of my salary into retirement only to leave the country later doesn't seem like a great decision. What do you think would work for my situation? I think I can definitely contribute to the 401k, since in the worst case scenario where I have to pull money out, I will not lose anything due to the company's contributions. What else should I stick my money into so it's not just rotting in my savings account at an amazing 0.50% rate? Should I invest in something like an index fund just so that my money is growing (or at least not dying to inflation), despite the taxation?
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Jan 22, 2010 20:51
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DreadCthulhu posted:What do you think would work for my situation? I think I can definitely contribute to the 401k, since in the worst case scenario where I have to pull money out, I will not lose anything due to the company's contributions. Careful. Check your 401k plan policy on company matching. Many companies have a vesting schedule, requiring you to be at the company for a number of years before the company matching is fully vested. Other than that, I have no idea what you should do as a non-Citizen/Resident. My hunch is you should open a brokerage account and invest in a regular taxable account using tax efficient vehicles (index funds or ETF's). The US still has the lowest cost investment options so even if you leave, it is nice to have a US based brokerage account for longterm investing purposes. If/when you leave, you may find the tax treaty between your home country and the US to have favorable tax treatment (no capital gains tax, and flat rate tax on dividends). And you would not need to worry about restrictions involved with retirement accounts (401k or IRA's)... your money is just an international wire away.
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Jan 23, 2010 02:13
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I just found out that my income for the 2010 tax year is going to increase by around 250% due to the need to work considerable overtime. I'm working through the tax consequences of this and trying to mitigate some of the ill effects. The two steps that I've identified are to max out my 401(k) contribution for the year and considering putting my IRA contribution into a regular IRA vs Roth IRA. Still undecided on this because I'm worried about long term income tax rates. Are there any other tax mitigation strategies that I can easily employ for someone who normally takes the standard deduction?
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Jan 23, 2010 16:42
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if you are not on a good group health plan, consider switching to an HSA eligible health care plan and contribute to an HSA. If you have any losses (from stocks) in your taxable account, tax loss harvest it. Contribute to Traditional IRA, and then convert to Roth in a future year when/if your income goes down.
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Jan 23, 2010 17:46
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Just as an anecdote I got started in AmerFunds in a similar way (gift from my father), and I've been very happy with them. Of course depends on your style and such but I really like the exposure and purchasing power of their target date funds vs. a lot of the competitors target date funds. I also dabble in some of the C funds (NEWCX for example) to increase specific exposure without a front load cost, though the C fund expenses are high to very high. That's one area I'll be looking at closely when I do my rebalance in the next few weeks, but I don't have the cash yet to make a move away from my "exposure" AmerFund C funds to Vanguard due to minimums, which are much lower with AmerFunds ($500 in many cases).
mcsuede fucked around with this message at 07:03 on Jan 25, 2010 |
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Jan 25, 2010 06:51
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80k posted:Contribute to Traditional IRA, and then convert to Roth in a future year when/if your income goes down. Any reason why you would convert the Traditional to a Roth? If you're just starting investing does it makes more sense to do a Roth or a Traditional if you qualify.
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Jan 25, 2010 15:25
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Dave The Ripper posted:Any reason why you would convert the Traditional to a Roth? If you're just starting investing does it makes more sense to do a Roth or a Traditional if you qualify. In this particular instance it made sense to do a Traditional IRA because Happydayz was going to be making a large amount of money this year and would be facing the tax implications of that. Traditional IRAs are pretax, so he could contribute to the traditional one this year when his taxes were high, and then roll it into a Roth next year when the tax implications wouldn't be as great, since his income would have presumably returned to normal levels. As a general proposition, if you can contribute to a Roth, you should. Most people aren't able to predict their tax situations as cleanly as Happydayz, but in general taxes are at historical lows and will likely go up, so it's better to pay the (low) taxes today then to defer them until they're higher in the future.
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Jan 25, 2010 15:35
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Chernori posted:I'm a 24 year old Canadian earning about 33k after tax at a reliable job. I have very low expenses and no dependents. I've been saving 80%+ of my paycheque for the past year, so I have about 35k that needs to be properly invested. Two-thirds of that is sitting in a Canadian Bond Index and the other third is idling in my chequeing and brokerage account. I asked a few similar questions recently, you might find my posts and some of the local experts replies useful. I won't give you advice on the specific asset splits because I'm no expert, but I basically did what you're doing: I went with TD due to their e-series funds (I'm doing monthly payments into my RRSP, so mutual funds are a necessity due to no fees as you mentioned). The time to move to ETFs basically depends on the brokerage fee and difference in the MERs. You want the MER savings to balance out the brokerage fee within a year or two (the payback time is up to you, but you're not gaining from owning an ETF vs mutual fund until after the upfront fees of the ETF have been paid back). So for TDs $29 brokerage fee and an example MER difference of 0.55% - 0.09% (TD US index fund and SPDR S&P500 ETF), the money you need to invest in order to pay back the $29 in one year is 29/0.46% or approximatly $6300. So, ETFs are only a good idea when you have a decent amount of money to invest in each time you buy. The exception may be if you really want to get into a segment of the market that just isn't available through Canadian mutual funds. The currency thing is a personal choice, I don't know what the thinking is on long term currency moves. I chose to ignore it for now, I understand that as I get closer to retirement, I may need to move more investments into Canadian currency so I don't get screwed by a jump in exchange rates, the same as I'll have to move more towards fixed income investments. For now I'm just looking at the parity US dollar as a bargain for buying US investments.
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Jan 25, 2010 16:20
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80k posted:DBC. Just make sure it is in a tax sheltered account. I'm curious about this, mostly as a broader question. From what I gather DBC holds dollar denominated futures. This is also usually true for foreign stock funds, etc. Does this create exposure to domestic inflation (mostly with foreign assets, but also assets that aren't tied to the USD such as commodities)? Does it make sense to hedge this somehow (say, DBV, or UDN)? AreWeDrunkYet fucked around with this message at 22:33 on Jan 26, 2010 |
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Jan 26, 2010 22:18
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Well, I'm a moron. I contributed $5,000 into my Roth IRA and sold off my target retirement fund for some other funds. I did my allocations by dollars instead of percentages. So now $13.00 of my $20,000 Roth IRA is in VFIFX, which I can't sell for 3 months.
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Jan 26, 2010 22:37
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AreWeDrunkYet posted:I'm curious about this, mostly as a broader question. From what I gather DBC holds dollar denominated futures. This is also usually true for foreign stock funds, etc. Does this create exposure to domestic inflation (mostly with foreign assets, but also assets that aren't tied to the USD such as commodities)? Does it make sense to hedge this somehow (say, DBV, or UDN)? Well, DBV is a carry trade strategy ETF, so it is not hedging anything. Dollar denominated does not mean dollar hedged. You are exposed to foreign currencies in the case of foreign stocks, unless you buy a hedged foreign stock fund which is rare. A hedged foreign stock fund combined with UDN would be a costly way to achieve the same thing as an unhedged foreign stock fund (which is the norm). Commodities have direct dollar exposure only in the form of the collateral. But that is only to offset the inherently leveraged nature of a futures position (matching a dollar denominated obligation with dollar denominated assets). Think of it as a fruit salad recipe for an unleveraged long position in commodities. If you add a dollar bearish component to it, you are messing up the formula in a very non-meaningful way.
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Jan 27, 2010 00:45
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Here's my situation that I hope you guys can offer some insight about : - 24 Years old, "medium to med/high" risk tolerance - I'm finishing up my Vanguard Roth IRA contributions for 2009 this year and will be able to invest $5000 for 2010 as well. - I have ~4000 in a regular ING Direct savings account. (Think emergency fund or otherwise) - I also have ~1000 in my checking account for the month-to-month expenses and the like. - No debts or outrageous expenses to report. - I have also started a new job with the following 401k options.  Click here for the full 1440x552 image. The company matches dollar for dollar 5% of my contributions, so obviously I want to contribute AT LEAST that much...which leads to my question. The default investment is one of their Target Retirement Accounts 2050, but I'd like to see everyone's opinions on the other funds that are available. In my limited knowledge, I was thinking something along the lines of a Domestic/Int/Bond split around 45/40/15, but then again I could be totally off base, factoring in my current financial situation. What would be the ideal funds to target for my splits? And are these funds good enough to warrant investing past the 5% match? I should also add that I'm looking to purchase a home within the next 5-10 years, instead of renting, and sooner if possible.(though that may be better served in the home buying thread) What sort of account should I be using to put money away for that? Thanks in advance for the help, everyone.
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Jan 28, 2010 01:56
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I'm going to open a Roth IRA, and I really like the Vanguard funds, but I don't know that I'll easily obtain enough money to have money in more than one fund for a while. I want to go ahead and get started, and Schwab has some good low expense ratio index funds--just not as many as I'd like, into the future. Will it be hard to switch companies, say, 5 years from now?
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Jan 28, 2010 06:58
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