Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10 5/3/83; site trw-unix.UUCP Path: utzoo!linus!philabs!sdcsvax!sdcrdcf!trw-unix!suhre From: suhre@trw-unix.UUCP Newsgroups: net.invest Subject: Mutual Funds Message-ID: <371@trw-unix.UUCP> Date: Wed, 20-Jul-83 17:40:22 EDT Article-I.D.: trw-unix.371 Posted: Wed Jul 20 17:40:22 1983 Date-Received: Mon, 25-Jul-83 23:10:56 EDT Organization: TRW EDS, Redondo Beach, CA Lines: 51 The advantages/disadvantages of mutual funds and the stock market in general is a long and possibly involved subject. One recent issue of MONEY Magazine had an article about how to invest in Mutual Funds. I would also recommend the book "Gaining on the Market" (haven't got the author's name with me). Research suggests that No-load funds perform as well as Load funds. The "load" is a salesman's commission. Mutual funds in general offer an easy way to get diversity in the market as well as allow additional investments to be made in relatively small increments ($100 or so). One might take the view that they won't bother trying to pick individual stocks, but will just try to determine the major market moves. Then the strategy becomes buy/switch into the funds at or near perceived bottoms, and buy/switch into money market funds at or near perceived tops. There are families of no-load funds that allow this at little or no charge. The previously mentioned book has a timing strategy for estimating major market directions. Also, there are the "elves" of Wall $treet Week which provide trend information. Switching is regarded as a sale for tax purposes, and depending on how whippy the market is, it may be a struggle for long-term capital gains. An interesting factor is the political election cycle. Imagine that the incoming administration implements some unpopular policies to correct for the excesses of the previous administration (which may have been their own). Then the market starts down. A couple of years later (2 to be exact) they say something like "Gee, it's time to start trying to get re-elected". Presto, as if by magic the Fed gets in step and everything starts getting cranked up and the market rises for 2 years. The wisdom is that the market discounts cycles, but if you look at a long term chart of the DOW (Dow Jones Industrials) and mark where the elections take place, it is very interesting. There aren't very many sure things, and the stock market isn't one of them. However, it appears that the use of mutual funds (with some care in selection) and major cycle timing strategies can provide ample returns to those with patience and discipline. If you will panic any day that the value of the fund is less than the previous day, stay away. Certainly before buying, do some research. The No-Load Fund Investor Handbook has a lot of information and seemed well written to me although a little tedious. The only "error" seemed to be in the comparison of load vs no-load funds. If you invest X in a load fund, and they take 8% commission, and you also invest another X in a no-load fund, and both funds grow at the same rate, they at the end you will have Y in the no-load and .92Y in the load fund. 8% of the final amount may be significant in absolute terms, but it is still only 8%. About every 3 months Barron's has a mutual fund performance issue which provides a lot of statistical information. I hope this hasn't cluttered up the net too much, but there doesn't seem to be a lot of activity on this net. Maurice