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By convincing people to pay them fees for the privilege of them under-performing the market index which is their benchmark.
Well I wasn't referring to fund managers. They're a lazy and unscrupulous bunch. So I agree with you that they underperform and make a lot of money in fees.
I was referring to the traders who make money for the institution. They use market timing and the techniques I mentioned above--and they make money...for the institutions, not the investors.
Yes, but you would have been stressing for way too long with that ride, waiting for prices to go back up after 2008 (assuming you invested after the crash of 2000). I prefer not to deal with that kind of stress. I'd rather sell when I make a decent profit, i.e., after prices have been rallying for a while. Then I get back in when prices drop again.
Quote:
Originally Posted by Sage 80
Expert traders at the largest banks and institutions make money by ...
Could you please specify who you are talking about? In one message you appear to be talking about us, regular investors reading this forum and trying to make decisions about our investments, and by extension, the experts who advise us and who's funds we invest in.
Then suddenly you switched to traders at the largest banks and institutions.
Just give us a clue which people's situation you want to discuss, okay?
Just to clarify: I'm talking about the former group, talking about actionable information we folks here can use. However, I'd love to see a report of a similar study showing how the latter group that you started talking about has done, on average.
Quote:
Originally Posted by Sage 80
They use market timing and the techniques I mentioned above--and they make money...for the institutions, not the investors.
It would be very interesting to see if they make money from market timing and "techniques" versus simply picking companies that are representative of the benchmark index and therefore benefit (make money) based on the average value provided by the investments they've made.
Well I wasn't referring to fund managers. They're a lazy and unscrupulous bunch. So I agree with you that they underperform and make a lot of money in fees.
I was referring to the traders who make money for the institution. They use market timing and the techniques I mentioned above--and they make money...for the institutions, not the investors.
well the managers at fidelity were not to lazy last year. 82% of their funds that use the s&p500 as an index beat it.
i can't comment on how the other families did.
my own mix of fidelity funds that i have been using for 25 years has beat the s&p500 to date and did so with about 10-20% less volatility.
What I'm saying is that regular people should not completely trust their money to funds. They should play a more active role in managing their money.
Fund managers manage the funds that the average person invests in. Basically those guys do nothing. They select a bunch of stocks/bonds for the fund based on what their institution allows them to do. The funds collect fees when people join them. The fund manager virtually does no work after choosing the portfolio. Thus, the fund can make, lose, or stay the same. Whether the portfolio is doing well or not, they do not reallocate.
Traders are hired to grow the institution's money. If they don't, they are fired, and replaced with traders who know how to grow money. They reallocate all the time by buying and selling whenever necessary to keep a positive cash flow. Their basic technique is to time the market by buying low and selling high. The price charts tell them when prices are high or low.
What I'm saying is that the average investor should do what the big institutions do to make money: waits for dips to buy low, and then sell higher than what they bought for.
There are free websites, like Yahoo Finance, that the average person can use to examine price movements on charts to determine when to buy and sell.
People should not depend on funds; most are not managing the investors' money in the best way. Investors should be more proactive in trying to grow their money. Those who don't want to reallocate themselves should get a broker who will reallocate for them.
"The time to buy is when there's blood in the streets." -Baron Rothschild
Yes I understand what you're saying and I respect your confidence in what you say. I'll agree to disagree, on the weight of the fact that no one has posted a citation to actual data, akin to that which is referred to in the link I provided earlier, that (specifically) market timing is a reliable way of exceeding benchmark indices. There is no question that traders research companies and make sure that they're investing in good companies. What you're claiming is, specifically, that market timing is how they make money. And while there is no question that some times some folks get lucky with market timing, and there are even some folks who get lucky with market timing quite often, what is still missing from what you've posted is some kind of objective information that can be relied on for making operational investing decisions indicating that on the average there is any group of people who consistently succeed with their market timing investments in excess of what could be achieved solely through investing in the corresponding market index.
What I'm saying is that regular people should not completely trust their money to funds. They should play a more active role in managing their money.
Fund managers manage the funds that the average person invests in. Basically those guys do nothing. They select a bunch of stocks/bonds for the fund based on what their institution allows them to do. The funds collect fees when people join them. The fund manager virtually does no work after choosing the portfolio. Thus, the fund can make, lose, or stay the same. Whether the portfolio is doing well or not, they do not reallocate.
Traders are hired to grow the institution's money. If they don't, they are fired, and replaced with traders who know how to grow money. They reallocate all the time by buying and selling whenever necessary to keep a positive cash flow. Their basic technique is to time the market by buying low and selling high. The price charts tell them when prices are high or low.
What I'm saying is that the average investor should do what the big institutions do to make money: waits for dips to buy low, and then sell higher than what they bought for.
There are free websites, like Yahoo Finance, that the average person can use to examine price movements on charts to determine when to buy and sell.
People should not depend on funds; most are not managing the investors' money in the best way. Investors should be more proactive in trying to grow their money. Those who don't want to reallocate themselves should get a broker who will reallocate for them.
"The time to buy is when there's blood in the streets." -Baron Rothschild
So do you thing "regular" people " are smart enough to pick just the right company,in just the right sector, at just the right time ,in just the right market sentiment?
and if they got that correct do you think they know what the competitors have on their drawing board?
most folks have enough trouble just dealing with market risk. throw individual company risk in the mix and for most it will be a disaster.
heck according to morningstar most small investors can not even get investing in funds correctly.
they buy when they should sell and don't buy when they should, and bail out when they should rebalance..
i highly don't doubt most folks should even go near individual issues.
And let's be clear: Even if they do happen to beat the index by 0.5% - consistently - if they're charging you 1% ER then the fund is underperforming the index by 0.5% and you're losing out on the deal. Again, to be clear, that's not going to happen to everyone every time, but rather is the end-result average.
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