i found this online mini-HOWTO and i thought that it would be useful for folks who don't get to the bookstore or can't find amazon.com on the web ...

link -->
investingessentials.blogspot.com/

INTRODUCTION
CHAPTER 1: The Five Essentials
CHAPTER 2: Develop An Asset Allocation Plan
CHAPTER 3: How Diversification Works
CHAPTER 4: Diversifying A Portfolio With Asset Classes
CHAPTER 5: Costs are a BIG DEAL
CHAPTER 6: Building Your Portfolio - A look at the Options
CHAPTER 7: Rebalancing
CHAPTER 8: Formalize Your Investment Plan
CHAPTER 9: On Your Own Or Hire An Advisor
CHAPTER 10: Final Thoughts, References, Glossary

please, please read chapter 10 and educate yourself via the books listed in the "Where to get more information" section -- the more you know, the more you'll understand, and the less you'll get fleeced.

ar-jedi

You always find the cool stuff

Quoted: You always find the cool stuff

today is my monthly investment research day!  

ar-jedi

ps:
it's disheartening that i also find stuff like this piece-o-crapola from that idiot Robert Kiyosaki of "Rich Dad Poor Dad" fame...
finance.yahoo.com/expert/article/richricher/30687

there is so much stupidity in the article linked above that my fingers would fall off before i finished belittling and disproving it.

oh wait, he wrote the above because he is hawking his "coaching service" --> www.richdad.com/catalog_resources/coaching/
IMHO, he should be banned from the internet.

yeah, that was like the worst yahoo article ever...the comments are amusing

Quoted: yeah, that was like the worst yahoo article ever...the comments are amusing

4 stars --> classic!

Antonio - Tuesday, May 8, 2007, 1:22PM ET **** Overall: 4/5 Most peoples do not understand that 401K/IRA/403b type retirement accounts are "savings" account instead of what's commonly advertised as investment accounts. What Robert is saying is absolutely correct if someone do not understand this difference and expect to retire from their saving accounts, good luck! You probably needs to win a lottery in order to retire young and retire rich.

ar-jedi

Quoted: Quoted: yeah, that was like the worst yahoo article ever...the comments are amusing 4 stars --> classic! Antonio - Tuesday, May 8, 2007, 1:22PM ET **** Overall: 4/5 Most peoples do not understand that 401K/IRA/403b type retirement accounts are "savings" account instead of what's commonly advertised as investment accounts. What Robert is saying is absolutely correct if someone do not understand this difference and expect to retire from their saving accounts, good luck! You probably needs to win a lottery in order to retire young and retire rich. ar-jedi

this is where Kiyosaki should be held accountable.  he actually hurts folks who believe him like that.  sad.

tag

an oldie but goodie -- more great stuff:

Dilbert's 9 Point Unified Theory of Everything Financial:

1. Make a will   2. Pay off your credit cards   3. Get term life insurance if you have a family to support   4. Fund your 401k to the maximum   5. Fund your IRA to the maximum   6. Buy a house if you want to live in a house and can afford it   7. Put six months worth of expenses in a money-market account   8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement   9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

link to more info and some thoughts on how to apply item 8 -->
www.marketwatch.com/News/Story/Story.aspx?guid={BE57F0AA-03D9-4320-BC4D-83363B6372F6}

ar-jedi

Quoted: an oldie but goodie -- more great stuff: Dilbert's 9 Point Unified Theory of Everything Financial:   1. Make a will   2. Pay off your credit cards   3. Get term life insurance if you have a family to support   4. Fund your 401k to the maximum   5. Fund your IRA to the maximum   6. Buy a house if you want to live in a house and can afford it   7. Put six months worth of expenses in a money-market account   8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement   9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

Would anybody else agree w/ me on changing (4) to "Fully fund your 401k to the employers match, anything over that fund your Roth.  If Roth is fully funded, then go back and fully fund 401k"

Quoted: Quoted:   4. Fund your 401k to the maximum   5. Fund your IRA to the maximum   6. Buy a house if you want to live in a house and can afford it   7. Put six months worth of expenses in a money-market account Would anybody else agree w/ me on changing (4) to "Fully fund your 401k to the employers match, anything over that fund your Roth.  If Roth is fully funded, then go back and fully fund 401k"

yes.

also, step 6 and step 7 should, in my opinion, be reversed.

ar-jedi

here is a pile of info regarding ETF's, how to use them, how they are tax efficient.  the only thing you have to keep in mind is that the author has a fairly large bias against traditional mutual funds so there is a little tilt to most of the articles.  the one concept you should take away from this series of articles is the tax-efficiency advantage that ETF's offer.

etf.seekingalpha.com/etfguide

ar-jedi

for at home reading

Quoted: Quoted: 4. Fund your 401k to the maximum 5. Fund your IRA to the maximum 6. Buy a house if you want to live in a house and can afford it 7. Put six months worth of expenses in a money-market account Would anybody else agree w/ me on changing (4) to "Fully fund your 401k to the employers match, anything over that fund your Roth. If Roth is fully funded, then go back and fully fund 401k" yes. also, step 6 and step 7 should, in my opinion, be reversed. ar-jedi

I would make a counter-argument...There are significant tax advantages to home ownership.  These advantages can free up cash in the form of tax rebates that make creating a 6 month emergency fund from the 2-3 month one that most people have more possible.  Additionally, since rent (and costs associated with home ownership) tend to be the largest line items in the family budget, knowing your costs beforehand can give you a better idea of the requirements of the emergency fund.

I'd be tickled pink if half of Americans did half the list.

Morningstar.com - Avoid These Four 401(k) Mistakes -->
news.morningstar.com/article/article.asp?id=195533&pgid=wwhome1a

ar-jedi

"A Bevy of Tax-Savvy ETFs"
www.businessweek.com/investor/content/mar2007/pi20070315_572252.htm

"Why does tax efficiency matter?"
money.cnn.com/2003/09/30/pf/expert/ask_expert/
(also see this related M* conversation --> link)

ar-jedi

why you should learn to love mid caps:

LC       = Large Caps (CRSP Decile 1-2) MC       = Mid Caps   (CRSP Decile 3-4-5) SC       = Small Caps (CRSP Decile 6-7-8) 75/25    = 75% Large / 25% Small 50/50    = 50% Large / 50% Small 1/3 Each = 1/3 Each Large/Mid/Small 1927-1945 Portfolio    Stdev    10K Growth ================================ SC           44.82     54,795.48 MC           37.98     45,582.88 1/3 Each     36.18     44,405.54 50/50        35.42     43,629.49 75/25        31.14     36,633.19 LC           27.30     29,518.82 1946-1965 Portfolio    Stdev    10K Growth ================================ MC           19.30    120,138.35 LC           15.65    119,992.38 75/25        17.08    116,736.04 1/3 Each     18.86    115,251.91 50/50        18.69    112,734.26 SC           22.28    102,935.07 1966-1985 Portfolio    Stdev    10K Growth ================================ SC           28.32    122,199.62 MC           22.64     92,400.76 1/3 Each     22.03     84,410.26 50/50        21.80     80,476.99 75/25        19.16     62,488.21 LC           17.21     47,018.19 1986-2005 Portfolio    Stdev    10K Growth ================================ MC           16.97    110,065.52 1/3 Each     17.05    103,098.00 SC           19.75    100,705.51 50/50        17.25     99,369.47 75/25        16.98     96,037.54 LC           17.43     91,116.78 For the Full Span 1927-2005 Portfolio    Stdev     10K Growth =================================== SC           29.63    69,411,459.35 MC           24.88    55,694,238.02 1/3 Each     24.04    44,538,009.14 50/50        23.73    39,333,336.79 75/25        21.35    25,663,668.39 LC           19.55    15,174,588.37 Holding a portfolio of "MC only" did well in each period... never the worst performer... usually near the best or the best performer. 1/3 Each LC/MC/SC (fat on mid caps) performed nicely to... never close to being the worst performer, usually near the best performer. Seems to assure that you get a good part of what the market has to offer regardless of the period.... where if you overweight LC... well you did not do so well in several of the periods and "SC only" also fell as the worst performer at times. "MC only" and "1/3 Each" out performed the commonly used S&D Approach of 1/2 Large, 1/2 Small in each period and for the full span.

Morningstar thread --> link

ar-jedi

Quoted: yeah, that was like the worst yahoo article ever...the comments are amusing

I really like seeing the continual pattern of 15 1 star ratings slamming him, then a 5 star rating saying essentially "You go girl! Stick it to the man!".

Hilarious.

Quoted: Quoted: yeah, that was like the worst yahoo article ever...the comments are amusing I really like seeing the continual pattern of 15 1 star ratings slamming him, then a 5 star rating saying essentially "You go girl! Stick it to the man!". Hilarious.

here's how much of an idiot-asshole he really is...  in a subsequent Yahoo column, he writes:

One of my more popular recent Yahoo! Finance columns, "Playing the Mutual Fund Lottery," wasn't written entirely by me -- my friend, CPA, and trusted tax advisor, Tom Wheelwright, was the primary author. While the piece was written in jest, Tom made valid points about why retirement plans filled with mutual funds are risky. As expected, the reader response was both positive and negative. Some people just didn't get the joke, or couldn't learn from its absurd extremism.

finance.yahoo.com/expert/article/richricher/36074;_ylt=AktRuVwNiSo..hjGQsJGzT4zt9IF

so he plays off the crap found under his named column as "someone else's work" and "written in jest".  

totally irresponsible and completely dumb.  
he should be taken out to the woodshed.

ar-jedi

Morningstar: Midyear Portfolio Checkup in Five Steps -->
news.morningstar.com/articlenet/article.aspx?id=195854&pgid=wwhome1a

1. Make sure your asset mix is in line with your target.
2. X-ray your portfolio.
3. Review your individual holdings.
4. Examine performance.
5. Plan your next move.

---------------

Seeking Alpha: The Seeking Alpha ETF Investing Guide -->
etf.seekingalpha.com/etfguide

---------------

Seeking Alpha: The 4 Criteria for Picking a Brokerage -->
etf.seekingalpha.com/article/15254



some good reading for tonight.

ar-jedi

creating-wealth.blogspot.com/2007/06/six-questions-to-ask-before-any.html

creating-wealth.blogspot.com/2007/06/how-to-select-mutual-fund.html

creating-wealth.blogspot.com/2007/06/risk-adjusted-return-sharpe-ratio.html

----

A Bevy of Tax-Savvy ETFs
www.businessweek.com/investor/content/mar2007/pi20070315_572252.htm?campaign_



ar-jedi

Quoted: why you should learn to love mid caps: LC       = Large Caps (CRSP Decile 1-2) MC       = Mid Caps   (CRSP Decile 3-4-5) SC       = Small Caps (CRSP Decile 6-7-8) 75/25    = 75% Large / 25% Small 50/50    = 50% Large / 50% Small 1/3 Each = 1/3 Each Large/Mid/Small 1927-1945 Portfolio    Stdev    10K Growth ================================ SC           44.82     54,795.48 MC           37.98     45,582.88 1/3 Each     36.18     44,405.54 50/50        35.42     43,629.49 75/25        31.14     36,633.19 LC           27.30     29,518.82 1946-1965 Portfolio    Stdev    10K Growth ================================ MC           19.30    120,138.35 LC           15.65    119,992.38 75/25        17.08    116,736.04 1/3 Each     18.86    115,251.91 50/50        18.69    112,734.26 SC           22.28    102,935.07 1966-1985 Portfolio    Stdev    10K Growth ================================ SC           28.32    122,199.62 MC           22.64     92,400.76 1/3 Each     22.03     84,410.26 50/50        21.80     80,476.99 75/25        19.16     62,488.21 LC           17.21     47,018.19 1986-2005 Portfolio    Stdev    10K Growth ================================ MC           16.97    110,065.52 1/3 Each     17.05    103,098.00 SC           19.75    100,705.51 50/50        17.25     99,369.47 75/25        16.98     96,037.54 LC           17.43     91,116.78 For the Full Span 1927-2005 Portfolio    Stdev     10K Growth =================================== SC           29.63    69,411,459.35 MC           24.88    55,694,238.02 1/3 Each     24.04    44,538,009.14 50/50        23.73    39,333,336.79 75/25        21.35    25,663,668.39 LC           19.55    15,174,588.37 Holding a portfolio of "MC only" did well in each period... never the worst performer... usually near the best or the best performer. 1/3 Each LC/MC/SC (fat on mid caps) performed nicely to... never close to being the worst performer, usually near the best performer. Seems to assure that you get a good part of what the market has to offer regardless of the period.... where if you overweight LC... well you did not do so well in several of the periods and "SC only" also fell as the worst performer at times. "MC only" and "1/3 Each" out performed the commonly used S&D Approach of 1/2 Large, 1/2 Small in each period and for the full span. Morningstar thread --> link ar-jedi

FWIW Vanguards's "stratigic equity fund" is all mid-caps or small caps that just moved into mid-cap price range guidlines. Its had a great run last 5yrs!

the real estate market summarized on one page:
usmarket.seekingalpha.com/article/41488

the best/worst performing ETF's for the 1st half of the year.  where would you place your bets going forward?
etf.seekingalpha.com/article/41469

ETF selector:
etf.seekingalpha.com/article/39288

regards,
ar-jedi

kansaskid... this is an excellent piece for you to read; ween yourself off Kyoski by spending an evening with the the following:
www.cfapubs.org/doi/pdfplus/10.2470/rf.v2007.n1.4580

-----

excellent "How to create your investment plan" from the folks at Vanguard:
https://flagship.vanguard.com/VGApp/hnw/planningeducation/general/PEdGPCreateHwToCreatePlnContent.jsp

nice Vanguard fund summary page:
https://flagship.vanguard.com/VGApp/hnw/funds/vanguard/byname

ar-jedi

www.forbes.com/2007/08/06/liquidity-trimtabs-outflows-pf-etf-in_tt_0806trimtabs_inl.html?partner=yahootix

Based on the retail U.S. equity funds we track daily, we estimate that U.S. equity funds posted an outflow of $11.6 billion in July, which would be the third consecutive outflow and the highest outflow since September 2002, when the 2000-02 bear market was bottoming. During the three months from May through July, U.S. equity funds posted an outflow of a whopping $24.7 billion, the highest three-month outflow since July 2002 through September 2002.

Mutual fund investors are invariably poor market timers. When the U.S. stock market topped out in 2000, mutual fund investors poured a record $260 billion into U.S. equity funds while pulling $50 billion from bond funds. In other words, they loaded up on U.S. equities at the top and shunned bonds right before interest rates were set to plummet. When the U.S. stock market bottomed in 2002, they pulled $25 billion from U.S. equity funds and poured a record $141 billion into bond funds. In other words, they sold U.S. equities at the bottom and loaded up on bonds as interest rates were at 40-year lows.

summary: read the entire article.

ar-jedi

some good new links-n-stuff:

fairmark.com/forum/
www.diehards.org/forum/index.php
www.efficientfrontier.com/

www.jasonzweig.com/whylisten.html  <-- read this.
www.jasonzweig.com/articles.php <-- and then read this!

www.investorsolutions.com/v2content/book/index.cfm

and of course, here is the complete summer reading list:
www.diehards.org/readbooks.htm

ar-jedi

Quoted: kansaskid... this is an excellent piece for you to read; ween yourself off Kyoski by spending an evening with the the following: www.cfapubs.org/doi/pdfplus/10.2470/rf.v2007.n1.4580

Indeed probably a good reading, but way too many graphs and charts.  Let's keep it simple!

The average american definately can't comprehend that jargon, hence the reason some financial plans are written at a 7th grade reading level.  Credit card companies type up their print in something like the 17th grade reading level.  Have you ever read one of your credit card Terms and Conditions or interest rate Appendix??  

Quoted: Quoted: kansaskid... this is an excellent piece for you to read; ween yourself off Kyoski by spending an evening with the the following: www.cfapubs.org/doi/pdfplus/10.2470/rf.v2007.n1.4580 Indeed probably a good reading, but way too many graphs and charts.  Let's keep it simple!

what line of work are you in again?
aren't you a salesperson for a fund company?



ar-jedi

In the same line of work as you Jedi, financial education.  

Is a Perfect Storm About to Hit the Housing Market?  (note author of this blurb)
seekingalpha.com/article/46390-is-a-perfect-storm-about-to-hit-the-housing-market

---

Is a Housing Crisis Developing?
seekingalpha.com/article/46440-is-a-housing-crisis-developing

---

Housing Bubble and Real Estate Market Tracker
seekingalpha.com/article/46283-housing-bubble-and-real-estate-market-tracker

---

Have you ever wondered how your 401(k) nest egg compares with those of coworkers or neighbors your age? Here's a sneak peek into what Americans have stashed away in their 401(k)'s and how they've invested their money, by age group.

finance.yahoo.com/retirement/article/103412/401ks-for-the-ages:-seeing-where-you-stand

---

By keeping your car for 15 years, or 225,000 miles of driving, you could save nearly $31,000, according to Consumer Reports magazine. That's compared to the cost of buying an identical model every five years, which is roughly the rate at which most car owners trade in their vehicles.

finance.yahoo.com/loans/article/103446/drive-your-car-to-death-save-31,000

---

Jim Wiandt's Five Favorite ETFs
seekingalpha.com/article/46011-jim-wiandt-s-five-favorite-etfs
Five Game-Changing ETFs
seekingalpha.com/article/46415-five-game-changing-etfs

---

ar-jedi

OST for later.

I did a little reading a while back about coffee house investing.  Interesting concept when the markets get wacky like the currently are.

"There will always be someone predicting disaster and someone predicting great fortune. At one time or another, each will be closer to correct than the other. But it won't matter to you if you understand this and have invested responsibly. You have a long-term plan; stick with it." Peter Lynch

"Everyone wants protection from the bear. But it's best to get it through diversification, not by trying to outsmart the market in a game in which the deck is stacked against the investor." C.V.Sanders, Morningstar

"Transaction costs and taxes kill most active traders. That's why no market-timing letter beats buying an index fund and standing pat." Mark Hulbert

"The market timer's Hall of Fame is an empty room." Jane Bryant Quinn, Author, Columnist

"Market timing is an ineffective strategy for mutual Fund Investors." CDA/Wiesenberger

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." John Markese, President, AAII Journal

"Among the 160 or so newsletters the HFD monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." Mark Hulbert 1-18-01

"Over a 12.5 year period, 224 of 237 market timing newsletters went out of business." indexfundsadvisors.com

"I'm a strong advocate of buying and holding." Charles Schwab

"Buy and hold is a very dull strategy. It lacks pizzazz and doesn't inspire much admiration at cocktail parties. It has only one little advantage: It works, very profitably and very consistently." Frank Armstrong, Author

"For most investors the odds favor a buy-and-hold strategy." Carol Gould, New York Times

"Some people in the popular press talk about 'getting into' a bull market and 'getting out of' a bear market, but it is all marketing hype." Rick Ferri, Author

"Only liars manage to always be 'out' during bad times and 'in' during good times." Bernard Baruch

"It must be apparent to intelligent investors who if anyone possessed the ability to do so (market-time) he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public." David L. Babson, famed investor

"If you buy--and then hold--a total-stock-market index fund, it is mathematically certain that you will outperform the vast majority of all other investors in the long run." Jason Zweig, Money magazine

"The facts suggest that successful market timing is extroardinarily difficult to achieve." Burton Malkiel, author of Random Walk

"If we haven't said it enough, we'll say it again: Market timing is dangerous." Barron's Guide to Making Investment Decisions

"Don't trade in and out of funds. Stay invested.-- Not only does buy-and-hold investing offer better returns, but it's also less work." Eric Tyson, author Mutual Funds for Dummies

"If I have noticed anything over these 60 years on Wall Street, is is that people do not succeed in forecasting that's going to happen to the stock market." Benjamin Graham"


ar-jedi

Excellent quotes to live by...

tag

OST

today's tidbits:

coffeehouseinvestor.com/reversion.htm

www.diehards.org/forum/viewtopic.php?t=7246

seekingalpha.com/article/50406-bank-of-america-s-miss-indicates-broader-economic-woes

socialize.morningstar.com/NewSocialize/forums/thread/188417.aspx

ar-jedi

Quoted: Quoted: an oldie but goodie -- more great stuff: Dilbert's 9 Point Unified Theory of Everything Financial:   1. Make a will   2. Pay off your credit cards   3. Get term life insurance if you have a family to support   4. Fund your 401k to the maximum   5. Fund your IRA to the maximum   6. Buy a house if you want to live in a house and can afford it   7. Put six months worth of expenses in a money-market account   8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement   9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio Would anybody else agree w/ me on changing (4) to "Fully fund your 401k to the employers match, anything over that fund your Roth.  If Roth is fully funded, then go back and fully fund 401k"

+1

Quoted: kansaskid... this is an excellent piece for you to read; ween yourself off Kyoski by spending an evening with the the following: www.cfapubs.org/doi/pdfplus/10.2470/rf.v2007.n1.4580

I haven't seen kansaskid drinking Kiyosaki Kool-Aid, but for anyone who does, John Reed's analysis of Kiyosaki is an eye-opener.

I read RDPD a couple of years ago based on a recommendation from a coworker.  There was just something... wrong  with it.  I couldn't put my finger on it until I read Reed's treatise.

www.fundadvice.com/images/stories/fundadvice_articles/risk_vs_reward_tables.pdf

ar-jedi

emerging market funds (e.g., BRIC) not volatile enough for you?  

i give you "Frontier Index Funds":
indexuniverse.com/index.php?option=com_content&view=article&id=3270&Itemid=28

read and understand this part:

Performance has been highly divergent from that of the S&P 500 in the last 12-month period. The S&P 500 was up 2.03% for the three months ended September 30, while the Select Frontier Index was down 5.61%. For the one-year period ended September 30, the Select Frontier Index was up just 4.16% versus a 16.44% rise in the S&P 500. The two indexes have a correlation of just 7%, while the correlation between the Select Frontier index and the S&P Broad Market Index, which covers S&P's full global universe of institutionally investable stocks, is just 17.5%. A recent S&P report published with the launch of the index says that the correlation between frontier and developed markets in the past several years has remained well below 50%, while the correlation between emerging and developed markets has been consistently above 80%.

Price Return SPSFP
Total Return SPSFT
Net Return SPSFN

ar-jedi

excellent "Hedging Market Risk" thread over on morningstar:
socialize.morningstar.com/NewSocialize/forums/thread/2454777.aspx?t1=1194918824


ar-jedi

Debunking five myths about retirement investing

Five Myths Of Active Investing (PDF)

ar-jedi

its the energizer bunny for investing!

Good stuff, thanks

The dollar is collapsing and global investors are dumping dollars, so it will continue to fall. That in turn will lead to higher inflation, and then the Fed will have to raise interest rates. Oil is closing in on $100 a barrel. We have the worst housing market since the Great Depression. There is a financial crisis caused by the subprime mortgage debacle. Banks are tightening credit standards. And if you needed more reasons to believe the stock market was headed south, you could always throw in global warming. Given all of these obvious reasons to be bearish about stocks, what should investors do? The answer is "nothing," except to adhere to their well-thought-out plans. There are many reasons for ignoring even what seems to be obviously bearish information. Let's see why this is the case.

<...>

Perhaps it was evidence like this that led legendary investor Warren Buffett to conclude: "We continue to make more money when snoring than when active."4 Another legendary investor, Peter Lynch, concluded: "Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves."5 And John Bogle, Vanguard's legendary founder, had this to say on the matter: "The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it [market timing] successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.6

indexuniverse.com/index.php?option=com_content&view=article&id=3402&Itemid=30&issue=

ar-jedi

A Perfect Display of Why Market Timing Doesn't Work A group of 48 Federal Employee Thrift Savings Plan (TSP) investors tracked their returns from Jan 1 2006 to Nov 24 2006 at TSPtalk.com. These investors changed their asset allocations on average 37.6 times over the 11 months of the study period, with the most frequent trader swapping 157 times, (impressive given the fact that the NYSE was only open 226 days.) As the TSP is a tax-deferred, no-fee plan these traders incurred NO transaction costs. Their investment options include 4 very low cost index funds which mimic the S&P 500, the Wilshire 4500, the EAFE, and the Lehman Bros Bond Index, and a special fund called the G fund, which essentially has the return of a medium-term government bond fund with the risk of a money market fund. There are also 5 "lifecycle" funds within the TSP program, but these are infrequently used by these investors. Transactions requested prior to noon Eastern time take place at the close of business that same day. The individual fund returns over the time period were: G Fund (Treasuries): 4.48% F Fund (Lehman Bond): 4.50% C Fund (S&P 500): 14.17% S Fund (Wilshire 4500): 15.43% I Fund (EAFE): 21.15% The mean return for these investors was 11.64%. The median return was 11.97%. The best return was 22.16%. The worst return was -4.01. The standard deviation of returns was 5.45%. Comparison against appropriate indexes would be appropriate: Perhaps the best comparison for these relatively aggressive investors would be against an all-stock "Total Global Market" portfolio (50% I, 39% C, 11% S), which bested 92% of them. Even an all-stock buy-and-hold investor who feared foreign markets and invested only in the "Total US Stock Market" portfolio (78% C, 22% S) would have beaten 35% of investors. Only 52% (not statistically significantly difference) of investors bested a "know-nothing" portfolio of 20% in each of the 5 funds. Even the average lifecycle fund investor (who often held a large percentage of relatively low-performing fixed income) bested 46% of these traders. But what about the "Warren Buffets" of the group. Surely there must be at least a few very talented traders in this group. In a random distribution, one would expect approximately 5% (or about 2 traders) to perform better than 2 standard deviations above the mean. In fact, no traders managed this feat, suggesting that the outperformance of their top performers was less likely to be due to skill than sheer luck. In fact, a distribution of monkeys throwing darts to choose their allocations would likely have produced a higher performer than these 48 investors. One would also expect 33% of investors to perform better than 1 standard deviation above the mean. In fact, only 14.5% of investors did so.

socialize.morningstar.com/NewSocialize/forums/thread/188417.aspx

ar-jedi

tag

www.investmentnews.com/apps/pbcs.dll/article?AID=/20071217/REG/312170031

Brokers and other industry observers are steaming over a new study that shows that investors who buy load funds do far worse than the funds themselves. The study found that from 1991 through 2004, load fund investors underperformed by 1.82% per year, while no-load investors underperformed by just 0.47%.

ar-jedi

Quoted: www.investmentnews.com/apps/pbcs.dll/article?AID=/20071217/REG/312170031 Brokers and other industry observers are steaming over a new study that shows that investors who buy load funds do far worse than the funds themselves. The study found that from 1991 through 2004, load fund investors underperformed by 1.82% per year, while no-load investors underperformed by just 0.47%. ar-jedi

I to the jedi but I question this data. In one of the best times to have stayed invested in say the wilshire 5000 or s&p500 both broad low cost indices 1991-2004 people whom stayed the course IMO would have got whats comming to them. Like about about 9%+ per yr,  averaged out over 15yrs unless I'm reading the post wrong. Its not you AR-Jedi, its the data I'm questioning as should "you" being a "individual in the buissness".

Quoted: I to the jedi but I question this data. In one of the best times to have stayed invested in say the wilshire 5000 or s&p500 both broad low cost indices 1991-2004 people whom stayed the course IMO would have got whats comming to them. Like about about 9%+ per yr,  averaged out over 15yrs unless I'm reading the post wrong. Its not you AR-Jedi, its the data I'm questioning

i think you should re-read that article.  it is from a financial services newsletter, and the gist is that an academic study found that people who invest in load funds underperform people who invest in no-load funds.  not surprisingly, some folks who work in the financial services sector don't like that conclusion -- since their paychecks come from selling load funds and they would prefer that their income continue unabated.
 

Quoted: as should "you" being a "individual in the buissness".

i have no idea what you mean by this.

as i have noted prior in this forum, i am an R&D (engineering) manager at a multinational telecommunications equipment company.  i am not an "individual in the business", if you are implying that i am a broker, adviser, consultant, or anything else related to financial services.  

i think you have me confused with someone who regularly posts info without disclosure, namely that he sells the load funds he is "recommending" to forum readers.  i have chastised him at least 5 times about this, and he has mostly corrected his behavior.

ar-jedi

gat