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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