Key Posts from the first 1500, #11

This was a post by Fletch, responding to an earlier post by me. This was post #55 on this board.

From Saul’s Post: This is astounding. The average hedge fund gained 6.5% in 2013, when the S&P 500 gained 29.6%, and Loeb is congratulated because he gained 25%. It shows how hard it is when you are investing billions of dollars, and how we can beat any Mutual or Hedge Fund on a consistent basis. He’s too big to invest in most MF RB type stocks.

Fletch: It really is amazing.

To give another example, I have two young children (ages 26 months and 4 months). They each have a 529 college plan that is managed by TIA CREFF. I also have another account that I manage that is earmarked for their college. Money goes in equally - so for example each quarter I’ll put $1,000 each into both 529 plans and then $2,000 into the combined, self managed account, totaling $2,000 invested into the CREFF accounts and $2,000 invested into the account I manage myself. That way, with the CREFF accounts and my own account getting the same amount of “seed capital” I can really see how I’m doing against CREFF (the wife was nervous about me managing ALL of the college money).

As you mentioned in your post, in 2013 the S&P 500 returned 29.6%. For 2013 I generated a 60% return in the self-manged college account while the CREFF account for my daughter (the only CREFF account that was open all year) generated a 21.6% return. And her account is in the most “aggressive” category as she has at least 16 years until the money will be needed.

I was able to add to BOFI, DDD, PCLN, Z, and a number of other stocks on dips throughout the year - while the professional money manager trailed an index fund by 8 percentage points. The small investor has a HUGE advantage provided he/she has the right temperament and can spot (and act) on good opportunities when they present themselves.



My state 529’s have only one choice for equity only holdings, an actively managed fund that has underperformed the index at all measurable time points. No choice for index only. One is called that but the fine print indicates 20% is actually actively managed.

It is sad. To get the tax credit we are forced to pay managers to underperform the index. They are crooks I think.

I have thought about researching other states, but never get around to it. The dollar figures in these accounts are small enough to make them hard to pay attention to.