My dads JPM Chase mutual Fund

Quote from nitro:



He just made 2.5% in one month.

I am motivated to tell you about this because in this environment, it is not terribly hard to make ~ 20% a year even in traditionally conservative investments, i.e., corporate bonds, OCGCX.
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This reminds me of my days of being a broker - sell when this happens and keep your mouth shut when it's down 10% in a month.

You are making one horrendous assumption - that the funds will earn 2%/mo with regularity. It's quite the opposite actually.

The mutual fund industry is one of the biggest smoke and mirror industries out there and you perfectly illustrated how they do it.

... gee Mrs. Smith, look at this fund - it made 2.5% last month. That's over 20% per year! What CD is paying you that? I didn't think so, let's get that paperwork started...

Meanwhile those funds will hit some decent monthly numbers from time-to-time but the overall results are terrible.

It's all slight of hand techniques and feed on people's greed.
 
I can't believe average middle class families are still being sold on this Bull you call mutual funds.

Screw that crap, I'm going to become a financial adviser one day and I would never diversify a person's account in more than 10 different companies. It's pointless and flat out stupid.
 
Quote from alexandercho:

I would never diversify a person's account in more than 10 different companies. It's pointless and flat out stupid.
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How is diversifying into 10 equities good but 11 bad? :confused:
 
When the total return of the S&P 500 over any reasonably long period during the last 40 years is discounted for inflation and dividends are not included, the return is nearly that of long term government bonds. Thus the market does keep one a few percent ahead of inflation over time, whereas bonds give virtually no return above inflation and could even give a negative return depending on what the real inflation rate is. Even TIPS (because of the way the government computes inflation) don't keep up very well with inflation.

But investing in the market takes on a lot of risk just to get a few percent return over inflation. The bottom line is that almost all of the market's return over time is due to inflation. This is something that mutual funds are not going to tell you! It really is surprising how little earnings growth discounted for inflation adds to stock market returns.

The way to come out ahead on average then, and get a little better return for the risk one is taking on is to hold a portfolio of only stocks that pay dividends and have a history of growing their dividends. Such a portfolio is bound to outperform any index fund which must of necessity never quite equal total market returns and consists of many stocks not paying dividends.

When index funds are being promoted it is because one can show that on average managed mutual funds do no better then lower cost index funds. But there is also the misconception that these funds will grow because of company earnings growth and share price appreciation beyond that of inflation. The data says otherwise however. The data says that nearly all the earnings growth and share price appreciation of a large universe of stocks is due to inflation! This is something that Bogle apparently missed.
 
Mutual funds are the biggest scams(aside from the Madoffs) in the world.

I cannot fathom, for the life of me, why a decent trader like yourself would advocate your dad to keep his funds in a mutual fund. You know the games they play throughout the day, the outrageous fees, how it is possible to pay capital gains on a loss etc....They are the scum of the earth.
 
That fund was down ~13% in 2008. This year's 20% would make it a total gain of 4.7% for 01/01/2008 until now.

Using data going back to Jan 1990, I have total annualized returns for high yield corporate bonds @ 7% with a max DD of 29%. Correlation of monthly returns with the SP500 is 60%. Total returns are better than the SP500 over the last 19 years, with lower risk.

OCGCX 20% return certainly looks more like an outlier year that isn't representative of the historic returns of the asset class.
 
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