Mutual Funds are Dead

You may have wondered why your mutual funds have been going down for the past 2 years. The answer is very simple, but not one you will hear from Wall Street as they want you to send money.

In order for stock mutual funds to go up you must have a bull market. Unfortunately, that bull ended 2 years ago and is probably not going to return for a long time. Yes, there will be short-term rallies that can last from weeks to months, but the downward spiral will continue. For the past 100 years the Price/Earnings ratio of the S&P500 index has a mean average of about 15. With the current P/E running about 41 the rubber band has been stretched too far and is now contracting toward a more realistic level. It will take a time, probably several years, for a true bottom to be reached.

Mutual fund charters require the fund manager to be fully invested at all times. The fund may be required to be invested in tech stocks, pharmaceuticals, automotive, Asia or some other specific category. If that particular sector is weak and almost all stocks therein are headed down the fund manager has nothing to buy and is not allowed to sell to put the money in cash or bonds to protect the investors. Some are allowed to buy and sell what they wish; others must invest in stocks of a particular index such as the Dow Jones, S&P 500 or the Nasdaq. Most of the fund managers today are too young to have experienced a bear market and do not know how or what to do.

Mutual funds are no longer a good long-term investment. The age of the stock mutual fund is over. Dead. Don't let your hard-earned money get away.

The small investor today has been taught to believe that the stock market always goes up. From 1982 to 2000 it did, but that was the end. All the talking heads on radio and TV have been telling you to buy the breaks and that the market always comes back - except when it doesn't. Almost none of them has ever seen or even studied a major bear market. The last one was 1973-74 just about the time most of these guys were in grade school or high school. They haven't a clue and don't know when or how to sell.

Today there are trillions of dollars in 401Ks, IRAs, pension plans, etc. run by professional fund managers, financial planners, bankers, etc. who have no idea how to protect their investors. More trillions are getting ready to go down the drain. Last year 90% of stock mutual funds lost money. The Grim Reaper is now the manager of your mutual fund.

For the little guy, that's you, there is only one way to protect your money. If you are in one of those plans you can tell them you want to have your funds in a money market account. At least it won't go down. If there are any fixed income or bond funds available to your account that is another safe venue.

Mutual funds are no longer a good long-term investment. The age of the stock mutual fund is over. Dead. Don't let your hard-earned money get away.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

Comments to al@mutualfundmagic.com

Copyright Albert W. Thomas All rights reserved.

Structured Settlement; Lawyers in NY and Mutual Funds

Minority Report the movie may not be far off if the Head of the SEC has anything to say about it. At a Senate Banking Committee hearing on CSPAN, William Donaldson said that the beloved SEC can no longer sit back and "mop-up" after scandals break. This idea of Mopping up is interesting, because if the SEC has anymore regulations then everyone will be reduced to cleaning homes for a living although even Service Master owner of Merry Maids is doing lots of legal insider trading of their stock options and that alone is telling us that maybe just maybe all that Form 4 Action is a sign of things to come?

Bill Donald-Duck as they call him at the yacht club in Long Island’s Oyster House, is working on ways to detect and prevent fraud before it happens. And yes that is his job to regulate, but what is he going to do, read everyone’s mind? Hire mind readers and psychics? The regulation now is hurting business and money flow to markets. What is so funny is that today they are using psychics to find corporate fraud when yesterday they were attacking the psychics? Go figure these crazy insane regulators;

http://www.weeklyplanet.com/2002-03-27/cover2.html

The SEC chairman is also forming a policy-planning group, which is another word for COMMITTEE, yah we need more committees with more juice to bring on more headlines? This NEW COMMITTEE, with ample power is designed to anticipate problems in the markets and aims to foster more collaboration, which means conspiracy theorist parties of openly homosexual regulators, among the agency's five divisions, all of which have access to the mass media anytime they pick up the phone and want to crush another free enterprise job creating company. The SEC has now been upstaged by New York state prosecutors under Spitzer and his clan (looking to run for VP of the US on the Democratic or Governor of NY soon), and some liberals think it needs to be more aggressive. Yah, sure we had to destry free enterprise to save the village to raise a child?

Although now in OKC we are seeing other power grabs for potential mass media headlines. Some possible examples of the SEC's new tone: its recent report on hedge funds and its ostensibly aggressive attempts to root out mutual fund fraud.

http://biz.yahoo.com/rb/030930/financial_sec_donaldson_5.html

But no one was actually damaged in the Mutual Fund trading issue? Destroying free enterprise, why are we doing this? Communism, then they will run for office once they have enough free media to insure a podium spot amongst other naysayers of this great country. Bill, Mr. William Donaldson THE CHAIRMAN of the S-E-C to YOU later, you won’t last long with that attitude, took forever to commit to any position about the NYSE self regulation, since he was worried to make a career death comment until Reed took over and got to the bottom of things and changed some of this insanity of 29 board members who are in fact the same people they regulate.

http://biz.yahoo.com/djus/030930/1303001122_3.html

What we need is some fixing and a little less destroying. Every time the headlines come out against any company people start losing jobs in those companies whose stocks take a hit and then the investor is worse off due to a hit in those share they own, whether it is in a mutual fund or individual stocks. And this was caused by the regulators who are suppose to protect the investor. Can anyone see the hypocrisy of the unending PR agenda of our regulatory bodies? They are the worst terrorists to your portfolio there ever could be. Osama is a nuisance compared to their worthless purported contribution to our civilization,

We need strong and stable markets, but these headline grabbers are not making for healthy investor confidence levels. Play it smart guys, walk slowly through the valley of death, because even if you are the biggest, bad-est TV podium story this evening, it will not matter if the valley is gone. We must take care of these gambling casino back door games but slowly and not at the expense of all we are and all we have built. The longest one-syllable word in the English language is "screeched." And we ought to make sure that our financial markets do not come to a screeching halt.

Lance Winslow, a retired entrepreneur, adventurer, modern day philosopher and perpetual tourist

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