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Lessons From 2008: 10 Reasons Not To Invest In Mutual Funds

January 23, 2009 at 3:25 pm
by Timothy Sykes

Watch these 7 free video lessons on how I became a millionaire

1. 2008 devastation/false-prophet-type-public-humilaiation: There are 10,002 US Stock Mutual Funds that Morningstar tracks and none were up. The average performance was minus 43.63%. They track 2,892 Foreign Stock Mutual Funds, and none were up. None were down less than 10%, and the average performance was minus 50.75%.

2. The vast majority of them can’t short sell, so you have to be Merrill Lynch-type bullish, look where it got those idiots!

3. Fees add up over time, better to invest in ETFs

4. Holding time restrictions and penalties for early withdrawal

5. Bill ‘Don’t call me an embarrassment to the industry because I’ve sold out/gotten too cocky/lost my special mojo’ Miller & his torpedo fund LMVTX, look it up if you don’t know what I’m talking about…and go mow some lawns because if you’re not well read enough to play the stock market.

6. Ken Heebner and CGMFX down 50% after sooooooo much press

7. Odds are the next 20-50 years won’t be as bullish as the last 20-50…read Triumph of the Optimists

Disclaimer: I’m guilty of having two, PRPFX and VWELX, down on each of them about 15%…not too bad, but I didn’t want to do ETFs because I have an itchy trigger finger, although, I think I can breakeven with 2-3 years…or it’ll be interesting watching them try!….lesson learned: stick to what you’re good at!

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  • http://www.thedisciplinedinvestor.com Andrew Horowitz

    TIM!

    You are hitting all of my hotspots! Mutual Funds should be ashamed ( I told you to get out of those if you recall) :-)

    They are supposed to be helping to add diversification. What happened?

    See this:

    Video: Mutual Fund Companies are in Trouble – http://tinyurl.com/7veotn
    $500 Billion of 401k wealth is destroyed – http://tinyurl.com/ax98sp

    Andrew

  • http://www.thedisciplinedinvestor.com Andrew Horowitz

    TIM!

    You are hitting all of my hotspots! Mutual Funds should be ashamed ( I told you to get out of those if you recall) :-)

    They are supposed to be helping to add diversification. What happened?

    See this:

    Video: Mutual Fund Companies are in Trouble – http://tinyurl.com/7veotn
    $500 Billion of 401k wealth is destroyed – http://tinyurl.com/ax98sp

    Andrew

  • Hello Idiots

    Bottom line is people can’t think for themselves. They buy, lose and they pay money to lose more. 99% of all financial advisors are getting you to BUY something, which is moronic. unless they are buying short index shares. not likely. advisors then sell manager’s returns, which is also moronic. they then say ‘nobody can time the market’ which is also moronic. then they say ‘double down’ and ‘average in’……really? add to an already moronic recommendation? all gurus suck. fine, buy ONE of Tim’s DVD’s and then think for yourself.

  • Hello Idiots

    Bottom line is people can’t think for themselves. They buy, lose and they pay money to lose more. 99% of all financial advisors are getting you to BUY something, which is moronic. unless they are buying short index shares. not likely. advisors then sell manager’s returns, which is also moronic. they then say ‘nobody can time the market’ which is also moronic. then they say ‘double down’ and ‘average in’……really? add to an already moronic recommendation? all gurus suck. fine, buy ONE of Tim’s DVD’s and then think for yourself.

  • pctrades

    Can somebody tell me WTF is going on with the bank stocks?

  • pctrades

    Can somebody tell me WTF is going on with the bank stocks?

  • Marc Dobson

    Yay to VWELX. It’s my own core fund, plus, on top of an already modest ER, I get it even lower with Admiral Shares for meeting certain levels of shares in the fund. How many other fund families do that for their shareholders?

  • Marc Dobson

    Yay to VWELX. It’s my own core fund, plus, on top of an already modest ER, I get it even lower with Admiral Shares for meeting certain levels of shares in the fund. How many other fund families do that for their shareholders?

  • Marc Dobson

    What do you folks think abut index funds?

  • Marc Dobson

    What do you folks think abut index funds?

  • alex

    Mutual funds are ok investements as long as you think of them as long-term trading vehicles. Put money into them at times like this when everyone is gloom and doom and then take your money out when everyone is the most bullish and euphoric (signaling the end of a bull market). In bull markets, mutual funds can make 50%+ annual returns, but then they give most of it back when the have to ride out a bear market.

  • alex

    Mutual funds are ok investements as long as you think of them as long-term trading vehicles. Put money into them at times like this when everyone is gloom and doom and then take your money out when everyone is the most bullish and euphoric (signaling the end of a bull market). In bull markets, mutual funds can make 50%+ annual returns, but then they give most of it back when the have to ride out a bear market.

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