Quote:
Originally Posted by McLovin
And then more often than not you'll fail to beat the indexes.
It's legalized gambling. Even very smart, super experienced fund managers who have teams of researchers usually don't beat whatever the broad indexes (i.e., the level of the markets in general) are doing.
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More often than not, yes if you pick a fund manager at random. But you should no more pick a fund or fund manager at random than you should pick stocks at random.
Sherwood gave good advice for an actively managed fund. The other factor is expenses - you always pay expenses, even when the value of the fund falls. The way to solve the problem is to buy a fund [1] run by a good manager, that [2] charges low expenses.
for [2] you buy a Vanguard or Fidelity fund
for [1] you either subscribe to a newsletter telling you what funds to buy in each of the two families; or (to use Super-Bong Bowl parlance) "roll your own" by looking at the newsletter ratings compiled by Mark Hurlbert.
Indiv. stocks should be left to a smaller, less secure portion of your portfolio - I look at mine as "play money" (tho a friend wants me to use options like he does).
For more discussion search OT for "Vanguard" - there are several threads, some with discussion between me and Paul Donkin, aka "Mustang Paulie" who favors index funds. We agree on Vanguard. Index funds are easier and are not far behind the best actively managed fund portfolios over long time periods.