Stock market up due to "plunging" oil price

[curly]

Yeah, like my mamma's friend that used to drive to 4-5 different grocery stores to save money...course back then the gas was .59 a gallon or so, and it didn't matter much. But her time getting to the stores had to be worth something.

 

[Blagadan]

but some people will drive several miles out of their way to save a couple pennies per gallon of gas or diesel when ready to fill up. I'll bet some of them waste more money in fuel than they save.

It could get real cold in Europe.

Our 'gasoline' prices are still around €1.30euro or $1.91usd a litre ($7.23 a gallon) but the prices at the pump have dropped a little bit lately.
A lot of people are finding it hard going here. Not only the cost of fuel for cars and home heating, but all the other knock on effects have raised prices of food and just about every other consumable from groceries to clothes. I guess you guys are seeing the same.

I will always check the prices of all 5 fuel stations in my town and always fill up in the cheapest station. Not so much to save a few pennies, but to support the station that maintains the lowest price.....

"The battle in Georgia" is just another excuse for the speculators to keep the prices high. SOB's.

 

[Richard]

Who knows? Not me, buy and hold low cost index funds. I like Vanguard.

I'm not arguing so please don't take this that way. If it works for you then that's all that matters.

With that said, most (I'd dare guess 'all' but won't say that) index funds by definition will NOT be able to 'beat' the market or what ever its benchmark index is, because the fund has expenses and the index does not.

There ARE funds out there with proven track records of actually beating the market. Many with loads, many with no loads.

Why buy something that you can pretty much guarantee will always lag its benchmark when you can buy something else that historically has beaten the same benchmark?


(For disclosure: I've been financial advisor for 22 years)

 

[Travelover]

..........

There ARE funds out there with proven track records of actually beating the market. Many with loads, many with no loads.

Why buy something that you can pretty much guarantee will always lag its benchmark when you can buy something else that historically has beaten the same benchmark?


(For disclosure: I've been financial advisor for 22 years)

Please name the funds that have consistently beaten the appropriate index over the past 20 years. (i.e. funds with emerging market exposure, for example, cannot be compared to a S&P 500 index).

 

[orangebluegreen]

There ARE funds out there with proven track records of actually beating the market. Many with loads, many with no loads.

Why buy something that you can pretty much guarantee will always lag its benchmark when you can buy something else that historically has beaten the same benchmark?

Usually the expense of an index fund is less than half that of a non indexed fund. Indexes sold as stocks are even cheaper as far as my understanding of them goes and I am going to be looking into them this year. I have had the wife's retirement account in Fidelity New Millennium and Low Priced Stock pretty much since their inception and done very well, but that is mainly because I can and have done research myself and kept tabs on managers stock picking and those two managers were the exception. I have little doubt I can do better than the funds, but...that takes 60-80 hours a week of reading everything you can get your hands on and if you do not have that much time your chances of outwitting a market that basically trades on inside information is pretty limited. Buy and hold a fund while dollar cost averaging is valid, the days of buying a stock and holding for your lifetime as so many of our grandparents did are pretty much gone. So much corruption, greed of CEO short term outlook to cash in stock options, and pressure to perform Q to Q for a quick gain has caused many U.S. companies to no longer think in sound long term growth plans. The best managed businesses are still privately held ones in my opinion, that's probably why Warren Buffett has old family run businesses approach him to buy them out rather than do an IPO, they know he'll continue to manage the business with a long term outlook. It also helped the funds I have used to be closed to new investors and gave the manager stability. Since the original manager retired on one the performance has suffered....that is the thing that makes managed funds a risk for many, not having enough expertise to pick good managers and not being able to control dumb moves by that manager. As you no doubt know "portfolio window dressing" often hides the truth, something your real dollars in the account cannot. Peter Lynch said as he left managing Magellan he saw so few good managers most people would be better off in an index. Unfortunate as that sounds, he's probably right, lay a chart over almost every fund against the DOW S&P or NASDAQ and most mirror the image. Even Berkshire Hathaway isn't looking so great the past 5 yrs and one of my funds owns a good portion of Berkshire. Some of the best money managers alive most people never heard of because they don't take accounts under several million and often tens of millions. There are some stellar managers, but often even they fail as ego makes them think they are the greatest. The best of them buy over 5% of a company but under 10% hoping the report they bought will spur copy cat groupies to buy and drive the stock up and it usually does. The problem is if they own less than 10% they don't have to report when they sell which you can usually count on being right after the public finds out and rushes in. It's a game you can ride along with if you're aware. Anyways...I could go on forever on this subject but this post will already be too long.


BTW....the title of this thread, headlines are written by writers who get paid to put down words, even words that are wrong or mean nothing. I get a good laugh at the headlines on finance sites.

 

[Richard]

Please name the funds that have consistently beaten the appropriate index over the past 20 years. (i.e. funds with emerging market exposure, for example, cannot be compared to a S&P 500 index).

1. If you review something like Morningstar, you'll see that they give historical results in 1,3,5,10 year and "since inception" catagories. (no "20 year" specific results)

2. Many funds are going to have other stocks in it them are not strictly S&P 500 (or insert index of choice) so it's not going to be a strict comparison. You got me on that

The basic point is... why buy a fund (as a benchmark index) that you can essentially guarantee will not perform as good as the index itself, when there are other funds out there (that might have some emerging markets or international or value or..... stocks in them) that might (and have historically) beaten that same benchmark?


We've got a portfolio of 10 funds that we've been using and their 10 year results (collectively) are: (as provided by Morningstar ending June 30, 2008)

10 year: 11.70% (S&P 2.88%)
5 year: 14.62% (S&P 6.39%)
1 Year: -1.24% (S&P -16.7%)

I don't believe the S&P numbers reflect any reinvested dividends so that would skew those numbers (the S&P results) upwards. They don't give that number on their site so I'm stuck 'reporting' that which they report. Don't shoot the messenger

Just so you know, our basket of 10 funds include world bonds, large cap, Growth/Income, Equity, Low cap value, mid cap growth, small cap growth and domestic bonds

As for WHICH funds we use, we tell everyone that we visit with

 

[Richard]

I should add that Morningstar has a "load adjusted" average annual return column and that is the information we use.

I only say that in case someone suggests otherwise.

 

[Travelover]

...............
The basic point is... why buy a fund (as a benchmark index) that you can essentially guarantee will not perform as good as the index itself, when there are other funds out there (that might have some emerging markets or international or value or..... stocks in them) that might (and have historically) beaten that same benchmark?.......................

Of course an index fund will lag its index by the amount of its expense ratio, which is usually tiny due to lack of active management and low trading. But something like 2/3 of actively managed funds do even worse on a yearly basis, after one accounts for the higher expense ratios and trading costs. So how do you pick the funds that will outperform in the future? Past performance is not a predictor of future success - you are required to tell clients that every day.

And what does Warren Buffet recommend? (you may have heard of him, as he recently passed Bill Gates in net worth)

"The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry, which in effect is all of American industry,"

http://www.marketwatch.com/news/story/warren-buffett-backs-index-mutual/story.aspx?guid={4A899C35-02F6-42CB-BB01-7B7E303003D4}

 

[orangebluegreen]

The basic point is... why buy a fund (as a benchmark index) that you can essentially guarantee will not perform as good as the index itself

Probably because some don't want some bushy tailed first year MBA losing all their money for them buying the latest video game maker for the portfolio. Think dot com "wiz kids". Most of them are probably selling used cars now, probably rusty BMW's from the yuppie days, of course they had to pawn their Rolex for gas lol!

We've got a portfolio of 10 funds that we've been using and their 10 year results (collectively)

The key word used is "collectively". Unless clients are placed in all the funds in the family their results will not mirror the collective result. One fund that has an outstanding spike can skew the results.
Example:
Barchart.com - Mutual Funds Twelve Month %

The number of ways to skew results it's infinite. Some funds lose money so badly they merge the assets into other funds to bury the record.

As for WHICH funds we use, we tell everyone that we visit with

Scrutiny is a b*tch isn't it.

Since this is a tractor forum check out Kubota vs Deere vs CAT vs Exxon Mobil. Tractors have held their own against XOM and done better than the indexes.
KUB: Basic Chart for KUBOTA CP - Yahoo! Finance

 

[Richard]

lol, ok, let me rephrase a question....

Is it better to buy funds that are historically proven to lag their benchmark or is it better to look into funds that historically (over same time period) have beaten the same benchmark?

Or, to put another way.... are you suggesting there there are NO funds that have performed better than the given benchmarks?



If you are suggesting that there are no funds that have done better than the given benchmarks, I'd find that interesting.

So, if you in fact agree that there are or might be some funds that have indeed beaten the same benchmarks then why would you pursue (evidently as a primary goal) those who do not?