Commonly Asked
Questions About This Site
Q. What is the purpose of this
site?
A. From its inception, this
Newsletter site has had one primary purpose - to help the typical
mutual fund investor do better. Most research on how individual fund
investors do has shown that on average they consistently do more
poorly than the stock and bond market indices indicate they should
do.
Specifically, we are attempting to
show that our Model Portfolios, and the subsequent investment
results that actually came to investors as a result of
following them, will prove to be significantly better than
even "buying and holding" the market indices. Obviously, if true,
this will not only be great news to those people who recognized the
value of our Portfolio recommendations, but also, will prove
incorrect the widely believed notion that it is just about
impossible to try to beat the market averages.
Q. How can you to so presumptuous
to think that you can beat the market averages when just about
nobody else seems to think it is possible?
A. Mainly, I agree that the
above goal seems to go against what most so-called investment
experts say and ordinary investors seem to think. I never set out
thinking that I could beat the averages. I just wanted to do a
little better than the average investor who tends to underperform
the markets. But now that I have beat the stock and bond market
averages with such consistency over at least the last 6.5 years
using some fairly easy to implement guidelines, I am more and more
convinced that these guidelines have a high degree of value, and can
help almost anyone who is willing to try to follow them.
Q. Why do you offer this
information for free?
A. Simply because it appears
that many people seem to need this kind of advice. If more people
had followed the free advice I have made available here, many of
them would have not suffered nearly as much during the 2000 to 2002
bear market. And they would have likely done very well too during
the improved market that has followed since.
Q. Why should I bother subscribing
to your Newsletter given how much free advice is already "out
there"?
A. My Newletter, I believe, is
one of the only sources of free advice that actually shows you how
the recommendations given have done every quarter since they were
first published. What good is free advice if you don't know the
exact nature of track record of the person giving the advice? So,
much of the free advice out there may be no more accurate than
flipping a coin and it could be a lot worse. I am likely one of the
few people writing about my investment choices who show you exactly
how well (or poorly) you would have done up to 5 years (or more)
after I gave the advice.
Also, be aware that it doesn't really
matter to me whether you subscribe to my advice or totally ignore it
- I derive absolutely no profit from this site as my Newsletter is
strictly for educational purposes and doesn't even have any ads. But
since I have already greatly profited from following the same advice
myself, I would like to make it available to anyone who wants to try
it. But I do ask interested investors to subscribe to my Newsletters
so I can get a better idea of how many readers actually are
interested. The more people who show they are interested, the more
time I am willing to put into making the Newsletters even better.
Q. Even if I can do a little
better by following your advice, I'm too busy or have already
decided on my investments. Why should I bother making some of the
changes to my portfolio that you recommend?
A. Overlooking the
significance of the seemingly small yearly performance gains can
cost you many thousands of dollars in the long run.
For example, by earning just 3% more
per year on your investments than "average" over the last 10 years,
your investments would now be worth 86% more than those of a person
who got just "average" results. This is a mathematical fact and is a
result of the compounding effect of growth year after year.
Q. How do you recommend the
average investor should implement the advice given on this site?
A. My Newsletters do not
intend to imply necessarily taking frequent action within your
portfolio. In the past, many of my monthly issues gave suggestions
on how to get a leg up in your investments. However, I needed a way
to track how well my suggestions were doing. So I created one or
more Model Portfolios which could be used to compute performance at
the end of a given period. On occasion, I previously changed the
portfolio whenever conditions seemed to warrant it, but now to
simplify things, I try to change it at most once at the beginning of
new quarter.
The suggestions I make are intended
to be valid for at least a year or two. In practice, I believe it is
usually best to have a relatively long-term reason for each fund you
hold and to hold most of your fund investments for many years,
unless they are highly specialized funds that probably are too risky
to hold during certain periods. (Example might be emerging market
funds during a period of global economic weakness.)
I do recommend adjusting the total
amount held in a given fund up or down, depending upon relevant
factors. (For example, when interest rates are going up, as now, it
makes sense to reduce your commitment to certain type of bonds.)
The maximum turnover one would
experience yearly if they did adhere exactly to the Model
recommendations would probably be in the order of about 20 to 25%.
But as I said above, I expect that most people would not make every
change, meaning that perhaps the amount of change might be closer to
a range of about 5 to 15%. Since you are holding funds at least a
year and likely not selling any fund shares after that more than
once or twice a year at most, and hopefully using no load funds,
there should be no fees involved to reduce your returns.
The only other consideration is
capital gains taxes; here, you can eliminate such taxes by
exchanging within a tax-deferred account such as a 401k. But if you
make a profit in a taxable account, the capital gains rate is low
enough that having to pay it on a gain should not be a big
impediment.
You do not need a broker to implement
my suggestions as you can purchase you funds directly from no load
fund companies that offer the same or similar funds as those that I
recommend. If you wish to use a broker, try to find the lowest cost
funds from the same fund categories as my recommendations.
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