Was this Fidelity Fund Manager Selling at the BOTTOM!

[Pekelo]

I think there is this inherent risk with funds, the built-in lag. I actually had a thread about it, but I didn't get an answer for it.

With the high volatility nowadays depends on when you give them the order to sell or buy, there can be a 3-5% difference because I assume they credit you with the end of day price. At least that is how I understand it.

Let's say on Sunday afternoon you give them a sell order. They execute it during Monday (although I am not sure how they time it) and you get the Monday closing price. Now if Monday is a huge down day, you will get credited with the LOD closing price even if they sold at the open. Again, I am not sure, but that's how I understand it.

I have the same problem with our 401K, I have to time it 1 day ahead because of this lag.

By the way I like your blog, nice timing!

 

[ProfitTakgFool]

Ain't this the truth. Guaranteed buy, hold, and lose your ass strategy. The perfect recipe for the government to issue the option of surrendering your 401k into their hands so they can "manage" it for you. When things get bad enough people will beg for this and it is the perfect source for Congress to "borrow" from.

Quote from NoProblem:

401k....... one of the biggest frauds ever perpetrated on the unknowing public.

Steve

 

[NoProblem]

Quote from riskfreetrading:

Steve,

A point in your post is actually a main reason why I decided to learn it myself. I thought that if I have, say a 2M account at retirement, I would be saving 5% (or 100K) of management fees if I were to do it myself (in addition of course of making more in comparison because it is my money and no one would really take care of it better then myself).

That is why I think every educated person should learn investing as it is a 100K (non-taxable) job at retirement!

It has been my bad experience with 401Ks that showed me what a friggen fraud the whole thing is.

Better to pay 30% taxes without 401k than it is to lose 90% of your retirement money under the fantasy of saving taxes and a worry free retirement via 401k contributions!


Steve

 

[gnome]

Quote from Pekelo:

I think there is this inherent risk with funds, the built-in lag. I actually had a thread about it, but I didn't get an answer for it.

With the high volatility nowadays depends on when you give them the order to sell or buy, there can be a 3-5% difference because I assume they credit you with the end of day price. At least that is how I understand it.

Let's say on Sunday afternoon you give them a sell order. They execute it during Monday (although I am not sure how they time it) and you get the Monday closing price. Now if Monday is a huge down day, you will get credited with the LOD closing price even if they sold at the open. Again, I am not sure, but that's how I understand it.

I have the same problem with our 401K, I have to time it 1 day ahead because of this lag.

By the way I like your blog, nice timing!

If the fund has a normal amount of cutomer sell orders, they just do them at the end of the day.

If there are extraordinary number of cusotmer sells so that the fund has to be selling during the session, everyone still gets the EOD price.

In other words, regardless of when you place the order to buy or sell, you get filled at the next time the NAV is calculated. For nearly all funds, that's EOD. Fidelity Selects, Rydex Dynamics are exceptions.. perhaps a few others.

 

[ProfitTakgFool]

It is almost impossible for a fund manager to beat the market, or benchmark. Timing is only one of the problems fund managers face. Almost no fund manager can consistently beat the market.

Quote from riskfreetrading:

Do you see any recourse? I really feel that this guy robbed me from a profit.

I never thought that there can be a fund manager of a long only portfolio who sells at a bottom. If anything he should be BUYING and moving from cash to stock! That is the only way he can outperform: buy on selloffs and sell on rallies to beat the average.

 

[shortie]

Quote from ProfitTakgFool:

It is almost impossible for a fund manager to beat the market, or benchmark. Timing is only one of the problems fund managers face. Almost no fund manager can consistently beat the market.

is it because they are dumb and/or lazy or is it because it's impossible to beat benchmark while moving large amount of money?

 

[riskfreetrading]

Quote from Pekelo:


By the way I like your blog, nice timing!

Pekelo:

Thanks for your detailed answer. Very useful. Also thanks for the reaction to the blog, and I am glad you find it useful!

Shortie (and some other ETers) were also kind to make unsolicitely reviews of the blog, but if others are reading it, it will help the blogger if he knew more reactions to the blog content. The blogger energy comes from his readers!

cheers!

 

[dozu888]

stop the endless rap on the 401k already.

what's wrong with the company match that gives your money instant 50% return, what's wrong with the tax shield, and the option to convert to IRA if you leave the job?

nowadays depending on the custodian, some 401k have decent options.

 

[huh]

Quote from dozu888:

stop the endless rap on the 401k already.

what's wrong with the company match that gives your money instant 50% return, what's wrong with the tax shield, and the option to convert to IRA if you leave the job?

nowadays depending on the custodian, some 401k have decent options.

Uhm because unfortunately I have garbage to choose from to invest my retirement money into in my 401K. I would be happier with it if 401K's allowed an option for self direct so that I can buy ETFs, this long only mutual fund garbage NEEDS TO GO!!

 

[Pekelo]

Quote from gnome:

regardless of when you place the order to buy or sell, you get filled at the next time the NAV is calculated. For nearly all funds, that's EOD.

That's what I thought,but here is my question. If the fund manager is good and can time the market and let's say sells at the open on a down day, who gets the 3-5% possible difference? Can the fund keep it as a gain?

Even if they execute close to the EOD, there still can be at least 1% difference between execution and EOD with today's volatility. I think this would be the whole point of having managers, trying to get the possible best price during the day for the orders.

Now for the fund if there are equal amount of new money coming in and redemption it might doesn't make a difference because they even out, but for the individual investors it still a few %.....