|
Author: Geoffrey Cummins Article source: http://www.askfinancing.com/. Used with author's permission.
Last time we looked at the real performance of the stock market (we used the Dow Jones as a reference point) and the apparent performance that makes the headlines and can be seen by a casual look at a chart or "ballpark" figures - briefly; the Dow went up, for example, less than 50 points between April 1999 and April 2005 - essentially 6 years with no growth!
But behind that seemingly "becalmed" Dow there were at least 10 significant moves each and every year totalling many thousands of points!
But did the Wall Street Moguls, the so-called "Masters of the Universe" make you any money from those huge movements?
No.
Of course they didn't!
Here's how I know...
The web is a goldmine of information. Knowledge that was just not available to the private investor or trader is now there at the press of a mouse button.
Forget the Freedom of Information Act - the Internet leaves it standing.
Foremost amongst websites offering information about the financial facts of life (the things that affect you directly - Mutual Fund performance etc) is Morningstar.com.
And amongst other things, morningstar.com publishes a league table of mutual funds on a weekly, monthly and annual basis.
If you check out the table that I have provided at my website (www.TriggerSystem.com - full link at the bottom of the article), you'll see the performance of the top 20 or so mutual funds over the last 10 years.
I've chosen the 10 year chart because mutual funds are essentially long term "investments", and which most people seem to keep almost for ever (the chart on my website is by it's very nature a little bit out of date, but things haven't improved too much since that screen shot was taken. If you want the up to date figures just go to www.morningstar.com and search their data base for the 10 year performance of mutual funds)
Take a look...
You'll see that the top rated fund, over 10 years, has shown a total growth of 23% - which at first sight looks fairly impressive; 23%; wow!
But the problem is, that 23% is total growth over 10 years, not growth per annum.
So the 23% total growth starts to look like a less than impressive 1.7% per annum compounded (hey, even the banks are giving more than that on deposit).
I'll be honest, I didn't believe it either - so I sent off an email to morningstar.com and they confirmed my worst fears - 23% is the total growth over 10 years.
Sheesh!
And the average growth of all 1304 funds? A less than impressive 7.3% over 10 years (less than one half of one percent)!
Check out that hiding place under your mattress - at least you don't have to pay exhorbitant fees to keep your money there.
The one certainty is that the Fund Managers will not, personally, have fared so badly - they will still draw their large salaries and enjoy all the benefits of charging you fat fees for their "professional expertise"
As Thomas Sowell wrote:
"It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong"
OK, I know not everybody has money "tied up" in Mutual Funds and some people prefer the higher returns of the Stock Market.
So what about the analysts and stock brokers?
Well, we all know about Enron and the others - the stocks in the early 90s that crippled so many of America's biggest pension funds.
Use the TriggerSystem link (shown below) to view the Enron chart screenshot, which is lower down the page (below the Morningstar.com screen shot).
You'll see that on 20 November 2000 there was a "technical sell signal" flagged for Enron when it was trading at just over $80 per share (don't worry about the term "technical sell signal" - it just means a sophisticated trading programme told it's owner that he should SELL).
Over the next 2.5 months, Enron's price fluctuated up and down without really going anywhere, until the middle of February 01 when it really started to slide (just as it appeared to have stabilized at $80).
As they say, a picture is worth a thousand words, and to save my typing fingers - the numbers speak for themselves.
Follow the chart to the right and you'll see that the major stockbroking houses and analysts were still saying "BUY" as the market lost 75% of it's value over the next 9 months.
It was only on October 19th 2001 - just 11 months after our "technical sell signal" that the first warning appeared from the Brokers and Analysts - and even then there was a further major BUY reccommendation before Enron slipped again to be worth less than 40 cents on 30 November 2001 - A decline from $80 per share to $0.26 per share in 12 months!
And all the time the major brokers and analysts were telling their ordinary customers to either Buy or Hold.
And as we later found out, the Brokers and Analysts were telling their biggest corporate customers a totally different story.
So, whilst the Stock Market is your best friend (trust me on this one, or look for my previous article) - the people who operate it may simply be their own best friend, and from your point of view, any advice you receive from them should be taken with a very large pinch of salt.
And if you still think you can trust the advice they give you, here's the simple "5 word question" I mentioned at the beginning of this article...
Ring them and ask: "What Guarantee Do You Give"? Just pick up the phone and ask them about the guarantee they give you regarding their advice.
Once they've stopped coughing and spluttering and picked themselves up from the floor, you may hear this well worn mantra: "the value of stocks can fall as well as rise" etc etc.
If they're not prepared to guarantee their advice, then frankly their advice is not to be trusted.
More next time... Geoffrey Cummins is a full time stock market trader and has spent the last 12 years developing what he calls his "weedy little spreadsheet trading system", giving him some unique insights into the working of the world's stock markets. Under pressure from friends and family, Geoffrey is now making his unique insights and trading signals available to a worldwide audience
And unlike your stockbroker, he guarantees you a minimum 300% return on your investment (ROI) Click here to view the charts referred to in this article
No wild claims, just common sense advice and the best Risk Free Trial (a full 90 days for less than $5 a week) on the internet all backed up by his unique 3 part / 300% guarantee.
If he doesn't provide you with a minimum return on your investment of 300% (the banks best offer is 3%. Not guaranteed) - he'll give you your money back. No questions asked. The TriggerSystem™
Googles Wonderland: Trouble In Paradise?
The fairy tale existance of Google is starting to experience shockwaves. So, what's the source of these shockwaves? Click fraud. As my readers know, I've writte...
Computer Security
Computer security is the process of preventing and detecting unauthorized use of your computer. Prevention measures help you to stop unauthorized users...
Change is the Only Constant
Fighting change or avoiding change are counterproductive. Embracing change is key to finding success in today's business environment.
How to Overcome Being Overqualified
Here's how to prepare for and avoid the negative perception of being "overqualified" for a job.
Refinancing Your Home Mortgage - Get Up To 125% Cash From Your Homes Value
Refinancing and getting extra cash out of your home is a great way to pay off debt or do a home improvement. Here are some tips to keep in mind when refinancin...
Post Workout Nutrition: Secrets to a Hard, Lean Body
Many people don't realize that aside from breakfast, your post-workout meal may be the most important meal of the day. Start taking your post-workout meal more ...
Organize Your Desk – Live Longer!
It may seem far-fetched, but by organizing your desk, your bedroom, your kitchen, and all of the spaces where you spend time, you could be adding years to your ...
Are You Just “Going Through the Motions”?
Life is too short - and too precious - to waste it just "going through the motions". Every single one of us has the potential to perform at a much higher level...
Reasons Why Home Based Businesses Fail
I was thinking about why home based businesses do not always find their successes. My thought here is not to say that home based businesses are not a good idea ...
Hot New Hair Style Trends For 2006!
Looking to experiment with new hair style trends in 2006? Your choices abound! There's an absolute feast of looks to choose from. Update your hair style with on...
It Isnt A Sale Until Youre Paid
Back in the days when I sold for CTV and CBC Television I had a manager that once said " It isn't a sale until you're paid." Most salespeople absolutely HATE ca...
Cant Afford Illness in America
I had become too sick to live in America.
Wedding Rings - How to Choose a Perfect Ring
Getting married and want to find a perfect wedding ring? With so many styles and materials it can be difficult to make a choice. Being an intelligent consumer, ...
Traffic Tips To Get People To Your Website
How to get website traffic in a few easy steps.
Finding an Auto Loan with Bad Credit
Tip on how to save money and get a car loan with poor credit.
Creating a Financial Future--Putting Your Plan Into Action Part 2
To prepare for the future, you must have a financial plan that you can implement. This article lists several financial vehicles including stocks, mutual funds,...
Advice From Successful Freelancers: Starting & Maintaining A Freelancer Career
For the e-book, Advice from Successful Freelancers: How They Built Their Careers & How You Can Too!, I asked ten questions of freelancers who were living their ...
Selling Your Business – Step by Step Process
Selling a successful running business is not as simple as it sounds. This article throws light on the process of selling a business from start to end and emphas...
Isnt It Time to Give Yourself Permission?
Remember back in school days when you needed a permission slip to do almost anything outside of the classroom? Things like simply being able to visit the washr...
Subprime Mortgage Lenders - Sub-prime Loans Now Available Through Traditional Lenders
Here are some helpful hints to getting a mortgage when your credit is poor.
Little Things Do Make a Difference
Little things can have a tremendous impact on a person. What little things have you done today for someone?
Tap the Creative Inside You
Imagination is the source of creativity. It's a place where unlimited possibilities reside. It's where pure energy lives. People are innately imaginative and c...
So What is Success Anyway?
Well I'll tell you what it's not. Even thought many of us like to periodically visit our own personal Fantasyland complete with its mansions, servants, fancy c...
An Introduction to Slot Machines
Slot machines are one of the most popular games to play at casinos. On any given night, expect most of the machines to be filled with eager players. They come i...
|
Print this page