This is the beginning of our year-end review series. [Hat tip www.realmagick.com for image at left] We’ve gone through our 560+ posts since we founded Investing For One back in September 2010, and read the wisdom of our advice with amazement. It has been fun and educational for us. We hope it has been for you as well.
A continuing theme on this blog is our firm belief in acting by yourself and investing as an individual. We’ve come down pretty hard against mutual funds, though we seem to be almost alone with that thought. Where ever we look or listen, we hear advice on which ones to buy. We hear about balancing the funds, or diversifying them, or getting tax-advantaged funds. TMI! (Too much information.)
Why not individual stocks? A mutual fund is just a big basket of individual stocks. Oh, right, some funds also have bonds, derivatives, commodities, CDOs, MBSes, options, hedges, and other sophisticated “investments.” We put quotes around that, because in our opinion, most of the other properties inside mutual funds are just gambles.
A popular unstated assumption seems to be, “If you get a whole bunch of risk, it’s not as risky.” Huh? Didn’t that thought lose favor when the Mortgage-backed Securities blew up?
Buyers and purveyors of mutual funds containing these financial instruments assume that managers of those funds are smarter than anybody else or are insiders who really know what’s what.
Can you say Madoff? MF Global? UBS? BofA? Lehman? Should IFO continue, or are you convinced you are just as smart, or maybe even smarter, to invest your own funds in your own stocks. And that you would have been out of ANY financials long before 2009 hit.
We’re going to continue with this theme for the next week or so, with tips and tricks for staying on top, keeping your emotions in check and enjoying your present life.