Quill,
I was looking at the charts on all 3 of the mutual funds the OP bought and the only thing that bothers me is that if we go into another little drop the OP is going to see his investment shrink before it goes up in the future. He got into the market pretty fast and that may be lucky good, or unlucky bad.
Also, I too have QYLD and it is paying a great dividend every month besides going up in value so yes I have it and plan to increase my position every chance I get…doc
DaddyO
Here are the top 5 large cap mutual funds from the Zacks website which is free. It lists their returns…doc
DaddyO
here is a chart comparing the top 2 mutual funds from the list above with the 3 funds you bought today. Its all about the returns, not the load (fees). If the returns were all the same then you would want to have a low fee, but the 2 funds so powerfully outperform the three you chose that it is a nonissue. Zacks information is mostly free. I spent maybe five minutes looking at your funds and then finding the top ranked funds per Zacks which is only one opinion. HTH…doc
edit: these are just my opinions combined with information from Zacks website. The future is never guaranteed by the past.
Just an FYI, some funds have “loads”, meaning the marketing folks skim X% right off the top as you invest. I only checked the first fund (MFTFX) and it has roughly a 5% load… meaning you send them $100… and immediately… they credit you with $95 balance in your account.
Not saying it’s a bad deal, but it’s something to be aware of.
I remember my older brother proudly telling me how he invested in some mutual fund right out of college… and I told him it was a load fund and he had just given 10% to the marketing folks and he only had 90% left.
That might have left a bad taste in his mouth. Twice. Not only did they skim 10%…
… he had to be told this by his 12 year old brother. LOL
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
@DaddyO406 - lessons for you on fees & load.
Do you realize that you already have an S&P500-index equivalent available to you in your TSP account? The C fund is an accepted substitute for SPY & has a really, really low fees & no load.
It isn’t a bad deal. It is a being raw-dogged-without-lube bad kind of deal. If you invested $10,000 in MFTFX in January 2011, you would now have $11,227.
$10,000 in AMFAX over the same period would be $15,597.
But if you invested in a low cost index index fund like FXAIX, you’d have $40,670 over the same period–and with less drawdown.
Now, PGTAX is a tech heavy fund, so you would expected to have done well recently and it has, returning $56,045 after the load over that period. Pretty good, right?
But, if you believe in the tech sector you could simply go with the Nasdaq 100 ETF (QQQ) and you’d have $66,108. And again with less draw down.
In short, these managed funds are not only worse than investing in the index, they are much worse.
This is why we need to reframe the debate about being average. If you simply invest in the index, you will crush the professional investors like bug.
Great post. Thanks.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
I’m sorry, there’s just no way the returns can be THAT FAR APART from each other. I’m calling bulls… hang on… wait a minute…
Holy cow…
Hohum,
Yes, I had most of my TSP in the C Fund throughout my career. But the money I have in my TSP is my life savings, small though it is. That money I am not comfortable exposing to too much risk. I screwed up the first third of my career, not contributing the max to my TSP, before realizing that I should have been all along. In my defense, it was tough raising 5 kids on GS-6 wages at the time, so I thought it better to bring home every dollar I could.
Maybe I’m being too conservative, but the fact that everyone seems to think a recession is highly possible at some point this year makes me very leery of exposing my nestegg to that much risk. Like I said in my original post, these two IRA’s wouldn’t hurt me too bad if I were to lose it all, but my TSP… that would. But I do appreciate you checking to make sure that I knew that that was an option!
Hi Rob,
thanks for the nice article. I thoroughly enjoyed it and imbibed a lot of it for myself. On the topic of options, it is probably best for beginners to only write puts and collect the bonuses.
And yes, you are absolutely right: with a huge portfolio, there are probably really only a few positions that make up the really big profit. Incidentally, I could well imagine that your contributions would be well received in another great Forum (I/O-Fund), plus selected expertise from two very good professionals (Knox Ridley and Beth Kindig). And even if I/O-Fund means a membership and a (bearable) annual subscription fee for private investors, I learned the most from Saul’s discussions and I/O-Fund (sometimes the hard way). Just my 2 cents for your wonderful contribution. mickel
Dear Quill,
Appreciate your reply to Daddy O. I too, am on a similar recently started journey to Daddy O, with the added challenge that I live in South Africa, where our currency is constantly losing value. Would be very grateful to learn about the Tetter Totter principle and how it should be implemented if you could spare the time. Thanks to all the others who have also replied on this thread, your time is appreciated by those of us who have much to learn.
Ok, I admit that I am confused here. On one hand I have Physician telling me that MFTFX and AMFAX are much better funds than the three I picked. On the other, I have Syke6 telling me that isn’t true, that two of my picks, FXAIX and PGTAX way outperform the funds that Physician mentioned. What am I missing here?
Oh, and thank you for the reply Syke6!
Its apples and oranges - I showed you the performance for last year (2022) with the return which most people lost some 25% of their investments and syke showed you the ten or twelve year performance. Remember, the past is no guarantee for the future. Also, I was showing you the top rated mutual funds from the Zacks website from last year. Below would be the top mutual funds from Zacks and the earnings if you held them for 10 years. Your 3 funds are not in this list, but you made an informed decision after much research and now you wait and learn…doc
Its all good imho
Below is a comparison of the highest rated Zacks mutual funds vs the two you mentioned:
It is important to distinguish between passive index funds and active management. Index funds buy an index. There are millions of indices but once you choose the index it is cheap for a fund to buy the index. Active management means you are paying for someone to pick stocks. Usually a very highly paid team of someones. Index funds have lower expenses since you aren’t paying a management team.
Will the active management beat the market? Maybe, but most don’t. Picking successful managers is just as hard, or even harder, than picking stocks. Personally, I’m more confident in my ability to pick stocks and sectors than managers. What is certain is that the expenses and loads create a significant headwind that you never get rid of.
FXAIX is an SP500 index fund. The expense ratio is 0.015%. The other funds you mentioned are all managed funds with much higher expenses and maybe loads.
Even if you stay with index funds you have to pick an index. Picking the SP500 (or Total Market, which is essentially the same) is making a bet on the total US economy. Picking indices mean you are betting that a specific part the economy will do better than average. Can you consistently pick which part of the US economy will succeed?
If you want to bet on tech and stay with Fidelity funds, look at FTEC, Fidelity MSCI Information Technology Index ETF. Being an index fund, it has a low expense ratio of 0.08%. Higher than the SP500 index fund, which is common, but still much lower than actively managed funds. Compare that 0.08% to your active tech fund PGTAX which has an expense ratio of 1.08% plus a front end load. How confident are you that the managers at PGTAX are worth the extra cost?
Buying anything other than SP500 or total market indexes, whether it be other indices, actively managed funds, or individual stocks, means you are making active choices, hopefully based on research and knowledge, in an attempt to beat the market.
LD,
Before we get started on the journey, I would like to know if you have access to :
I subscribe to the above.
On each you may have to do some construction with building a Template or two for Barchart
and some for Stockcharts. From scratch the charts at the above site usually come in default mode.
If you say yes, I’ll send the rules for Simon Sez III and Simon Sez II.
or point you to the below I hang out
Going to attach a few charts and ask if you can see them. You can click on them once or twice to see a bigger chart.
re: NGE
re: EZA
I wish you the best
Quill -
LD,
I messed up on the EZA chart
so here goes with
On top chart after viewing it, jamb the chart to the left so that you only see 5 red and green bars. What you want to do is see only at least 2 Arc’s or smiley faces showing.
By following Simon II rules, you would have bought EZA on 4/11/23 and then we wait and wait for the next Sell signal or Finish line.
4/11 is the Out of the Gate signal.
Go back to 4/5/23 and that is the signal to sell EZA.
Follow the two simple rules and shall not lose other than a minor head fake that sometimes occur. Let’s go back some more to 3/17 and now what should you have done. Looks like you would have made a bundle of money.
Have fun and see ya around the campus.
Quill - a poor church mouse scratching for a living as a Swing Trader for over 45 years.
Ps. re: DDM / DXD (tetter totter)
There was some action today. What should you have done.
Portfolio construction is a complex topic that you can study as much as you like and still never create the “perfect” portfolio. Different people have different desires, and you won’t really know if you made the optimal decisions for five, 10, 20 years or more. So it is really important to understand why you own things.
If you just bought FXAIX and nothing else you’d probably be just fine. In 30 years you’d be sitting on a nice bundle of money. Now, tech stocks tend to grow faster than the broader market, so you could make the argument that should include some of the NASDAQ index in your portfolio (QQQ). But QQQ is more volatile, so maybe that’s unattractive to you.
Small and midcap stocks tend to outperform large caps (again with more volatility), so there’s an argument for including some percentage of those as well. If you want to get more complicated, you could consider the Fama-French four factors. See where I’m going? There is really a lot you can take into consideration if you so choose.
One thing you should always avoid because it almost guarantees failure is owning an actively managed mutual fund. Each year, Dow Jones compares actively managed funds with their respective benchmarks.
Active funds blow. Over any reasonable period of time, almost all of them underperform their benchmarks. By simply buying the index you will beat 90-95% of them. The level of under performance is crazy. Imagine if this success rate of doing nothing was applied to any other profession. You could be in the top 10% of professional golfers without ever practicing. You could score in the top 10% on the LSAT without going to law school. That’s how bad those active fund managers are.*
Finally, the first rule of investing is don’t lose money. Those front-loaded mutual funds guarantee a loss.
*But they are good at their jobs. Their job is to take money out of your pocket and put it in theirs. Beating the market isn’t really part of their job description.
@DaddyO406 - the funds in your TSP are pretax, the funds in your traditional IRA are also pre-tax. In that sense, they are interchangeable.
The TSP essentially limits an accountholder to various % of six options.
The Traditional IRA has a whole range of choices (individual stocks, ETFs, mutual funds, etc.). At least two of the mutual funds you selected have a load, so you gave yourself an extra hurdle. Not judging, I made a similar mistake (but mine was at the start of my investing career, with more time to make up for that blunder)
Well, considering that I just began these two IRA’s, I kinda am at the beginning of my investing career, right? Meaning, if I want to get out of those two funds that I just got into, no big whoop, right? Well, one of them does have an early withdrawal penalty of $40. But now that several people on here have pointed out to me that I may have made a mistake, or at least severely limited myself, I am considering taking my lumps, and pulling out of the two managed funds, and putting those $$ into index funds for the moment.
You mention,
I am looking on my TDA account summary, and it shows that two of my funds (FXAIX and JENSX) are no load funds. I bought them because they were very highly rated on Morningstar’s “Premier List”. The PGTAX wasn’t on that list, perhaps because it isn’t a no load fund?
However, I do know that I was charged $74.95 to purchase the FXAIX. That sounds like a load of something to me! But that was the only fund of the three that cost me to get into. And I believe that is also the one that stated while I was purchasing it, that there was an early withdrawal penalty if withdrawn before 180 days. And I didn’t see anything about that on neither nor the the Prospectus. Where do you see that "at least two of the mutual funds you selected have a load’?
Daddy-O
PS. I now see that “Brokerage Commissions Apply” on the FXAIX fund, so that’s where the $74.95 charge came from. And I also see that, at least at the moment, the load fee for PGTAX is being waived.
