Friday, August 29, 2008

Hmmm, It Might Be Time to Consider "Stuffing Money in My Mattress" as an Asset Class

According to this article on just 17 out of the 2,100 mutual funds that are open to new investors have positive returns for the past 12mths and year-to-date. That's 0.81% of mutual funds with positive returns (before fees) or you had a 1 in a 100 shot at making money in a mutual fund this year. That should ease the pain when you open up your next Fidelity or Vanguard statement, right?

"Out of almost 2,100 diversified retail U.S. stock mutual funds that are open to new investors, just 17 have positive returns for both the past 12 months and year-to-date, according to investment researcher Morningstar Inc. Nancy Tooke runs three of them."

So in effect, if you exclude the effects of inflation and falling dollar, if you had stuffed your money in your mattress you would have beat 99% of "professional" money managers that were taking new money. Wow, these guys make the Farmers Almanac look accurate.

The article goes on to praise Ms. Tooke for her stellar 3-4% returns (about what a decent bank paid last year without any fees). Yikes. An average investor with a limited understanding of the market could beat that in a day if they were willing to be a bit of a contrarian.

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Happy Labor Day!

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