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Mutual Funds vs. Individual Stocks

Started by pkamm, 05/09/2003 05:40AM
Posted 05/09/2003 05:40AM Opening Post
Someone here mentioned staying away from mutual funds. I can't find it now. But I have an issue with this.

I think the inherent diversification protection of funds in general is worth the cost. The bear market illustrates this. You can lose 90-100% of your investment easy in an individual stock and many have done so since the market peak in 2000. The S&P500 is down, what, 40%? And it seems today's "solid company" is tomorrow's accounting debacle. And a lot of still-'solid' companies are down much worse than the overall indices.

I'm a fan of index funds myself.
Posted 05/09/2003 08:25AM #1
That was me. Why not mutuals? Well first off let me requalify INDEX mutuals are fine low expense and no capital gains nonsense.
Fund managers need to make yearly gains to show their annual performance so they can boast. It is rare to find the manager that has a long term 5-10 year outlook. Bill Miller, Buffet, et al are the only ones worth a darn.
Once a fund gets stocks from about 8 industries its beta will be about 80%. There is no way over time a fund can beat the market. The math is simple. So less industries will give you a bigger beta.
my 2 cents
more later