Good News?
As the man said, "I've got some good news and I've got some bad news. What do you want to hear first?" It was replied, "Tell me the good news first". The good news is that they are going to make some changes in the mutual fund industry reporting to help the investor and the bad news is it isn't going to make any difference in your bottom line.
It seems that us small investors are getting the usual window dressing to make it seem that we are getting a good deal, but when you go in the store to try on the merchandise it still doesn't fit any better.
Here is what the Securities and Exchange Commission passed as a new regulation for registered mutual funds. Instead of 50% of the Board of Directors being from outside the company they now must select 75% from outside the company. Can anyone tell me what difference that is going to make? The guys who own the fund will pick people who are friendly to their goals. Will they care any more for the investors than they do now? Window dressing.
One new regulation I do agree should help a little (but very little) is the requirement to provide more information to shareholders about their contracts with investment advisors and how they are approved. Big deal. The mutual fund industry said this will raise their costs. How? They have the information. All they have to do is add it to their prospectus. Also remember that the prospectus was written for the Dilbert lawyers at the SEC to meet the regulations and not to give you understandable information.
Do you remember what happened to your funds from 2000 to 2003? Most investors lost from 40% to 60% of their money. Let's hope they don't hire back those same analysts again, but they probably will. Just their contracts will be different. It is doubtful their results will change.
Furthermore these new fantastic, wonderful rules (sic) will not go into effect for 18 months. I guess as one of the 95 million mutual fund owners I will have to wait, but I'm not going to hold my breath.
What I did not hear from the SEC was that mutual fund managers should be paid on performance of how well they do with your money. Now they get paid by how much money they have or can get and keep in the fund. Sounds backwards to me. See if you can get your broker to refund all commissions if your fund does not make money. Don't hold your breath on this one either.
Eighteen months from now investors are going to feel a lot better when all that good news goes into effect. Yeah.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exitingMore Stocks & Mutual Funds Information:
Related Articles
Stock Market Education; Day Trading for Beginnners; How to Pick Stocks
The trading method you employ to approach the stock market can make a big difference in your results.Stock trading is a very competitive field and in order to succeed you need to FOCUS on a set of simple strategies that you can implement without hesitation.
Kick The Tires
Before you buy another car you walk around the lot, kick the tires, slam the doors and look at the mileage indicator. That's an odometer.
Stock and Fund Dividends
When is a dividend not a dividend?The latest thing "conservative" brokers are preaching these days is to buy stocks that pay dividends. Everyone likes dividends.
Valuation
Every day I hear from the "experts" on CNBC-TV and the radio gurus that the way to buy stocks is find value. One man's Rembrandt is another man's connect-the-dots and fill in the spaces.
I Love You, Warren Buffet
Sometime around 1980, can't remember exactly, there was a flight of money from many countries to Switzerland. The clock makers had so much money pouring in that the banks took interest rates to zero and even for a period of time were actually making you pay ½% interest to them to put your money in their banks.
Value Investing: Selecting From The Bargain Bin
Picking a beaten-down stock requires a different kind of selection process. Normally, most companies beaten down this far have no earnings to speak of.
Price Targets
Every day in any financial publication you will find the Wall Street mavens giving their predictions on many stocks. It was issued here and should go there.
VIX
No, this is not a symbol for some Latin number. The Wall Street mavens talk about this market timing device as if they knew how to use it to determine which way the stock market is going - up or down.
Momentum
One of the basic laws of physics states that a body in motion will continue in motion in the direction it is going until interrupted by another force.That basic physics law also applies to stocks and mutual funds.
What is a Trading Plan - and Why You Need One?
How do you make money without picking tops and bottoms?I am glad you asked..
Structured Settlement; Lawyers in NY and Mutual Funds
Minority Report the movie may not be far off if the Head of the SEC has anything to say about it. At a Senate Banking Committee hearing on CSPAN, William Donaldson said that the beloved SEC can no longer sit back and "mop-up" after scandals break.
10 Tips For Creating Wealth From the Stock Market
1. Do not spread your money too thin.
Mutual Fund Expense Lies
When purchasing mutual funds we are cautioned to read the prospectus, look at past performance, check out the fund manager's record and see what their expense ratios have been.We are also told that we should not buy funds with expenses exceeding 1% to 1.
How to Find Value in No Load Mutual Fund Investing
What are you thinking when it comes to your no load mutual fund selections? Are you saving pennies and sacrificing dollars?Are you spending your time looking at expense ratios, analyzing Morningstar ratings and searching for funds with low fees and no 12b1 charges? If you are like most people, you know these things in and out. You've spent hours evaluating them, and your chosen mutual funds cost little to purchase and maintain.
Trading Education: The Best of Both Worlds!
I made my very first investment in the stock market when I was ten years old. Ever since then I have been hooked! Now I check out hundreds of trades each year with the same excitement andenthusiasm, and each time try to find that one market at the right time that could dramatically create wealth.
Trading Stocks -Never Forget About A Past Trade
We all know that emotions control every decision that an investor makes in any type of money related vehicle. Whether is be the stock market, real estate, art work or antiques, emotions ultimately set the final price on both sides of the transaction.
"Fears Only Enemy Is Action"
What a great statement!I just heard someone use it in the context of personal and financial success and it struck me as a brilliant summary of an issue we raise in the SMG Tutorials.Fear is a huge issue with a lot of traders.
Long-Term Investment In Todays Market?
The stock market is very unstable at this time going up and down while interest rates are so low you want to be a borrower and not a lender. Would you like some suggestions on how can you get the most out of low interest rates while being assured your principal will not disappear while you are trying to make some money? Of course, there is always the danger of borrowing the money and then spending it just because it is there.
Robert Rodriguez Weathers the Stock Market
Robert Rodriguez likes to buy stocks at their lows. When there are not enough stocks hitting new lows, he closes his fund and piles up cash.
So, What is This Stock Market Thing Anyway?
We've all heard of the stock market and probably have a general idea of what it is and how it works either from high school economics classes, television financial reports, and the countless film depictions of what happens on the floor of the New York Stock Exchange. But how does it really work and what is meant by "playing the stock market?"The Stock Market in a NutshellCompanies sell shares of stock as a means of raising capital.