Been having a very good year economically and want to invest most of
the money. One broker is telling me to put the money in a no-load
mutual fund. Another broker is talking up Exchange Traded Funds.
I do not understand ETFs at all.

Looking for help with investment choices.

So far in September, I have been getting all manner of terrible financial
advice on ETFs. A lot of financial advisors seem to think high risk bets
are the only way to go.

Think of an ETF as a mutual fund that trades like a stock. There are hundreds of them and they can be as conservative or aggressive as you like.

I just spent the morning talking friends about investment strategies & the 5 I talked with agree with me "Good time to be in cash". If you want to be in mutual fund go with a Vanguard index fund

I now think that good investing is very conservative and long term. May sound boring but its emotionally appealing to me.

Diversification, dollar cost averaging, and an eye for your time horizon....yes. Long term investing doesn't work very well if you already have one foot in the grave.

?

E.T.F. stands for exchange traded fund. A portfolio of something that trades like a stock on the exchange. There are also closed end mutual funds, that trade on the exchange like a stock. There are many many various types of both, from fairly calm to heavily leveraged, broad based to on the other hand narrow based.
If you are NOT familar with these, get familar, plenty of stuff on the net explaining them before investing.

Equal dollar purchases at specific time intervals.

An example of this is a persons 401k contributions that are deducted from each paycheck.

It helps in lower your average cost in a sideways market, like what we are experiencing now, post correction. When the market is down you buy more shares at a lower price, when it's up, you buy fewer at the higher price.

http://jasonkelly.com/resources/strategies/

Check out this 3% Signal strategy that uses a single small cap ETF (IJR) and a bond fund. His book is fascinating and makes alot of sense to me.

If you have the ballz you can now use ETF's to short that market if you think the current trend will continue for any period of time.

Having said that, I am a long term invester (not trader). I have thought about shorting some via ETF but then remember that timing any market is in my opinion a fool's errand.

My $.02

twofish

This. Wellington has been fairly decent.

Been dealing with investment issues/strategies for many years but never had the help of a broker or "advisor" - except possible insights gained in casual conversation. So, no market expertise/advice here. The only thing I can offer is take a clear look at your current circumstances and your own likely future. That is probably a more predictable guide than guessing what the market, and the various market options, will do.

For a long time, my days (and often evenings) were taken up with job responsibilities and we were raising four kids - eventually seeing them through university studies. Dollars available for investment were very limited and I simply did not have time to study the market or be in contact with a broker. So, tried to go with the best managed mutual funds looking toward the longer term and, with the retirement plan, took advantage of income shelters where circumstances enabled such.

As the girls went on to careers we had some discretionary $$, so put some into local low-risk real estate development schemes and some into higher risk private ventures - tried to stay balanced - but never got into the "market" as such. Worked out OK.

Later, as age and eventual retirement became factors, my very stable and low operating cost supplementary retirement vehicle began to offer personal annuities that were were being managed much like the highly successful retirement aspect. So, I plunked much of the yields from earlier ventures into those annuities. Selected a mix of lower yield/lower risk stuff and some medium risk things that seemed to have good growth potential. This worked OK.

Later, it looked like the retirement income would be sufficient and our main interest became where to live in our dotage and how to grow something to leave to the kids. So, we bought a chunk of real estate to live on and I shifted most of the remaining annuity and retirement funds to stock-indexed accounts. With the exception of that sudden market drop a few years ago with eventual recovery, that worked OK. Given any good fortune, the kids will make a buck when this place is sold and we will not have needed to dip into the annuity aspects.

Sorry if this has seemed like a personal ramble, but saw your inquiry and it triggered recall never before assembled into a picture. There are different ways to skin a cat. There was no long-term plan and, of course, nothing was guaranteed. We simply read the circumstances and flew by the seats of our pants. Who knows? It might have gone better with a good broker/advisor using the market venues.

I always looked at it this way:

1. I find a company (investment) I like. No emotion. The fundamentals are sound, leadership is good - everything tells me this company, over the long haul, is going to provide a good return on my investment.

2. I buy 10 shares for 200 dollars. My cost per share is 20.

3. Something happens, a run on the markets/industry that doesn't necessarily have anything to do with my company (investment) directly. Share price falls to 10 dollars per share. People get spooked - they see they just lost 1/2 their money and forget WHY they made their choice. Lots cut bait and bail.

4. At this point you buy another 20 shares for 200 dollars. You now have 30 shares at an AVERAGE cost of 13.34 per share. All that now needs to happen is for your share price to rise above that average cost and you're ahead. It has to break 13.34 $/share instead of 20 $/share. You've dollar cost averaged your investment down.

So long as WHY you invested in the company hasn't changed dramatically (management change, massive changes to the world situation etc) - the company/investment still makes sense and happened to be hit by general volatility in the market- buy into the dip. Don't be emotionally invested, pay attention to how the COMPANY is doing, not the market and you should be okay.

Now I'm sure more sophisticated people here will tell me I'm way wrong but it's just how I see things - looking in from the outside.

"Know what you own, and know why you own it." - Peter Lynch

You are not wrong.

A short term trader should not average down. If the market tells them they are wrong, they need to get out and look for another trade.

As an investor, you philosophy is generally sound. Keep in mind it is necessary to examine both the micro and macro factors affecting your stock, either could make it necessary to rethink your investment thesis.

High risk is ok if you are young and have time to recoup before retirement. As you get older you want to shift some your investment to lower risk investments like bonds.

Just got this email from Jason with a pretty good offer . . .

Final week before rebalance

I've written to you about this before, so I'll keep it short.

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I want you to join the letter and start your own plan. If you do, you'll gain immediate access to the new "3Sig Quick Start" guide, which will get you going right away even if you don't yet have a copy of the book, "The 3% Signal."

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Subscribe now and I'll send you last Sunday's Kelly Letter introducing a new Dow 2 system for the non-signal portion of the letter. You'll also receive the site password, which will get you immediate access to the 3Sig Quick Start guide and the Kelly Letter archive, with recent issues right on top for easy browsing and with the most current three summarized on the top page for you.

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Yours truly,

Jason Kelly



Jason Kelly & Co.
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No load Index funds I like Vanguard lo fees and taxes. Over time you will thank me.

I could lower my dollars cost ave. very easy today, but I am scared to invest right now. My biotech fund most likely won't recover for several years. I can lower my ave cost but every time I invest it goes down even more. Soon I will be out of money to invest. I'm glad I only put half of what I had in or I would be crying . I put in the eek before last in BP oil. It was not @ $32.18 since 1996 except in 2010 for a few days. Sure enough, it went down 10% in 10 days. When it stops going down, I dont know, but if I invest more, it will go down more. The dividends are good@ 7.5%, the price seems very low, oil can't stay this low for too long. I still thick it will be a good investment for the long run. I also put money into AGNC. It did well tip today. Is anyone pulling out of their investments? I think it's too late to pull out now.

For me selling would be a huge mistake. The stock market goes up more than it goes down.

Gosh Orange, I am down in every fund now. We have 15 of them. I have only been in this a lot for 16 months though.

Here is the hard part that most people cant do. Keep buying when the market is going down.

I always have and it has paid off for me.

Actually, I bought a lot when it went down under 8K in 2008. Because of that, it changed my long term outlook. People are worried about 16K now. Lol.

THIS, THIS, THIS!!!!!! Proven million dollar advice, right there.

For many, many reasons.

I pulled out about fully in May knowing that I would be spending my first summer retired and at my place in the mountains of north Idaho. As you know, I am a fairly high risk investor and just did not want to pay attention for the summer so I didn't and thoroughly enjoyed my time there. I will await my 3Q review and decide whether to jump back in or not. I do own a fair chunk of Royal Dutch Shell due to my former employ and it has taken a major hit but I do not need it and know that it will return so it will all ride.

EDM, I was wondering about what you might do. I wish I'd pulled out of my FBIOX but got a bit greedy and thought it would go up more. Then Hillary shoots her mouth off about biotech . I just dont quite know what I am doing but I will put the rest of our spare money in soon. I dont know what yet. I know a financial advisor that told me large caps should be a good bet about now. That was last week. I dont know for sure though. My fear is it will go way down even more , like a 10k DOW. All it takes is a panic sell and everyone freaks out if it gets too low and they all sell at once. That is the scary part.

I am thinking what we have seen is a correction and nothing more. Near term the market will bounce around a few hundred up and down until oil starts to rise a fair bit. My guess end of 2016 at best. But hell, I am 53 and and am good to go for a bit so now rush here.

tom - Markets are off again, every body seems to be worried about China. I have the $$$$ in the bank right now, and maybe I should just hold tight.

Very, very hard to do.

The fund I am most likely going to buy is FOCPX. It's a Fidelity fund . It went down 1% today to my surprise. I just don't think it is going to go down much. If the Dow gets down to 15,566 like meltdown Monday in Aug. I think that is the true bottom. But then it goes up and dives again. I dont know much but I think it is leveled off now. No? Anyway, to the OP. I will never buy a loaded fund again. Also watch the expense ratios too. An Index fund is just a plain good idea in most cases. If you have 50k or less I thin index funds are good ideas. If you want to go a bit more aggressive many small cap funds seem to do better. When ya get more money, funds in several categories might be better for you. I have a little bit in an S&P index fund.

Just set up an appointment with my Fidelity guy for Friday to decide where to jump back in.

Hint, the Fidelity guy only knows how to get the Fidelity guy paid. Real value changes in a matter of seconds in the market, and EVERYTHING else is factored in, always.

just sayin.

If you need advice, NEVER, and I mean NEVER take it from someone who sells ANYTHING, but advice.

I wish I had known this forty years ago. It's free to everyone here.

Wrongo. Been doing this investing chitt for 30 years and am now retired at 53. I ain't no dummy but do welcome advice.

Ya never asked how I been doing. ;-{>8

I am guessing that you are just fine.

I am, and I would have said exactly what you did when I had been investing for only thirty years. ;-{>8

If I where living in the US, I would choose Vanguard Index funds.

50% US Index
30% World Index
20% World Bonds

Lowest fees above else! I do not expect to get more then the market.. I want to be IN the market, for as long as possible.

Buying monthly on the upsides and downsides.. and Hopefully when I retire this nest egg will have increased enough for me to live comfortably.



I used to buy individual stocks.. but it just became to much of a hassle. There are a bunch of companies in the US that would mostly survive anything, but I have to deal with currency ups and downs as well. Not good for my long term sanity..

Thirty, forty meh...

Kind of like asking a used car salesman if the car you are looking at runs good.

Two cents from one of the most unsophisticated investors around.

Everybody and their brother, after they have given their pet formulas for getting rich by constantly moving money around and being lucky, states the following:

- Diversify
- Invest over time and get rich slowly
- Always pay yourself first - i.e., put money aside before buying anything else.

Easy peasy so that what I've been doing for several years now. I put a healthy percentage of each paycheck into our company's 403b fund which they match up to a point, that's done automatically.

I also put a few hundred dollars each month into Vanguard Index funds - their total stock market, international stock market and total bond market funds. That's a line item "expense" on my monthly budget spreadsheet just the same as paying the mortgage and utility bills. That takes advantage of dollar cost averaging. I buy $xxx worth of each fund around the 1st or 2nd of the month, I generally don't even look at the current price.

Took a big hit in 2008 like everyone else but recovered. Took a lesser hit just recently but with the diversification my total investments' net worth didn't dip too much at all. In fact when the market fell so badly that Monday IIRC I put a whole month's extra allotment into the stock fund that night to take advantage of the good prices.

I started really late in life so won't be retiring in my 50's but am on track for a decent amount when I do retire.



I read a book a few years ago called "The Best Investment Advice You Will Ever Get" or something like that. In the preface the author says you can read all twenty something chapters or skip to the very last chapter. The first chapters were all about the ins and out of investing, lots of technical details and historical data. Then in the last chapter he says, "buy broad based indexed funds. Vanguard and Fidelity both have good ones. If you do that and invest long term you will make just as much money as if you followed all of the detailed steps related in the first chapters of this book".

I'm sure there are more sophisticated ways of handling money if one wants to devote the time and energy to following the markets and prognostications. I happen to like the KIS principle in all things and the above seems to be working okay.

Yup, deny human nature at your own peril. (PS- It doesn't matter how nice they are or how expensive their suit is.)

Book probably authored by Larry Swedroe. Really sound advice. As you move along there are companies that deal in higher amounts and have a higher percentage invested in the market at all times, thus yielding a bit more. Same principle.

When I was 16 our family visited one of my father’s patients in Ohio. He was a multi-millionaire and had a private airstrip in his front yard.

My father was a big stock charter, marking his little X’s and O’s and trying to predict when to buy and sell. Never did that well as I recall, at least he certainly didn’t beat the market as a whole.

This millionaire gave him some advice which I still remember. He said, “Al, the way to make money in the stock market is to pick some good companies. Pick ones you think have staying power. Buy stock in those companies. Then don’t touch it, don’t even think about it. Twenty years later you will have made some pretty good money in the stock market.”

Yup, just your own private mini-index fund. I had a couple of great uncles that did the same.

My biggest mistake was thinking that they were fuddy-duddy and old fashioned and that now a days, we have better more high tech and totally genius ways of picking stocks and timing the market. Still fool's errands.

I will say that modern portfolio theory is, IMO, a sound way to distribute funds in asset classes. That, and your stomach for risk.

Just a little story that my dad put me onto. When a broker calls and has a hot deal, it means that his firm is getting a big bonus for pushing some cash strapped company. Hot undervalued items do not exist. The market adjusts value in a matter of seconds.

Sometime, look at how much money brokers have as a group. Very little. If they knew what they say they do, would that be the case? If the knew what they say they know, why would they even be wasting their filthy rich time selling stock on a mom and pop level?

The "secret" to the stock market is there is no secret. The key to making money is being knowledgeable, you need to know how companies are doing, how the future looks for their market and products, etc. If you have the time to do the research and make sound choices, then you'll do well. If you mindlessly follow the advice of experts, expect to loose your shirt.

If you don't have the time, then picking a good investment adviser will be worth it to you. And you'll need to do research into the investment advisers as not all of them are worth a damn.

Just like any other professionals, sometimes you can do a better job than they can, sometimes not. Know your strengths and weaknesses and make your choices accordingly.

Some rules that always seem to work.

During a bull market, invest in large cap
During a declining (bear) market, go small cap & healthcare

Never forget, 89% of all fund managers fail to beat the market (S&P 500). So while they're unpopular because they're always measured against market leaders (and if you know how to always pick the market leading MF, let me know), they are guaranteed to beat 89% of all Mutual Funds, so it makes sense to always keep a significant % of you money into a good index fund.

The "Secret" is not picking the right stocks, but learning money and risk management. NO ONE always wins in picking stocks, the experts learn how to minimize their losses and maximize their profits. You do that by dumping a loser immediately...something very difficult to do with Mutual Funds; that's why professional investors never invest in mutual funds.

GG,

Your above post is not exactly correct.

Markets go in cycles. During the early portion of a bull market, value stocks typically out pace growth stocks. In addition small to medium stocks tend to out pace large caps early in the bull market cycle. Late in the cycle, there will typically be a sector rotation toward the larger, high PE growth oriented names.

As for buying small caps during a bear market, that's a poor strategy. Small caps usually head lower first. In addition during a bear market the smaller stocks will have fewer resources to weather the storm and are more likely to end up in bankruptcy. Once the market has bottomed, the small the medium value stocks will typically lead the way out, but you don't want to be in them on the way down. During a bear market yield is your friend, as it will help put a floor under a stock. However you must watch the cash flows to insure the dividends are safe, and be care in a rising rate environment.

As for professional money managers always selling their looser immediately, that just not true. This is a general rule for the short term trade, those trading for days or weeks, but not for the long term money manager. When managing large sums it can be difficult to quickly move in or out of a position because the size of your trades will move the market. In other words, if a large funds wants to take a 3% position is a given security, chances are their purchase will move the stock higher in the process providing them a higher entry price then they would of likes.

As for 89% of all funds failing to beat the S&P, that's from a very old vanguard study done during a late bull market when retail investors where heavily investing in index funds. Other studies done during late bear and early bull markets have yielded vastly different results with the active managers out performing the indexes.

The picture's actually a lot more complex then you painted.

I can see your point on not buying small cap on the way down; kinda hard to make a rational point of buying anything that's heading down. But I agree that small cap is the first to lead the market upward, and that really was my point. I'm an option trader, not a buy and hold kind of guy, so I don't buy or hold anything that is trending down. (hard to explain that strategy on an internet forum)

As for the 89%, my bad the number was 86% and it was a 2014 study.
http://www.washingtonpost.com/news/...utual-funds-ever-beat-the-market-hardly/

As an option trader you probably understand my point that one style of fund is not the best for all markets.

Managed early, index late in the cycle.

Knowing all that to be certain, you guys must be absolutely rolling in dough.


;-{>8

Put your money in Vanguard Wellington or Wellesley and forget about it.

20 years in the industry.

I was short the market in 2008/2009. It was a good year for me.

That's nice,but I am more interested in good decades, many. ;-{>8

Great funds.
Wellington is closed to new investors, or at least it was 10 years ago. Wellington II had a pretty high minimum, so it typically not available to someone just starting out.

What I know for certain is that I (and anyone else who's honest) will pick a losing stock 7 out of 10 times. What you need once you understand that is risk management to where you only lose pennies for the 7 losses and make dollars for the 3 that go your way. I do okay, but I'm not rolling in it. Options trading is very active and I don't have enough time to do it full time; nor do I have enough money. But the stock market scares the hell out of me, that's why I trade options and only work on very short time frames.

Holding index funds and balancing the portfolio twice a year is also very time and energy consuming. ;-{>8

I study it, work at it relentlessly and worry a lot. Teehee.

Worry? When all is said and done, not much worthy of worry in the $$ scene. Came into life with zero and will leave in the same condition.

Good point, and it seems there are better things to do in the mean time.

As fro investing, I am lost. A financial manager did a whole analyst on my funds. The plan wants me to put into 15 funds. It is very diverse. Some Europe large cap funds, some funds are only 2% of my portfolio. It makes some sense but there has to be an easier way. One nice thing is , @ 7% she says I can retire at 60 with very little yearly investments. I dont agree. She is depending on Social Security. I'm not expecting more than 50% o fit. Just one question, what is a decent asset allocation? Why is there not a fund that has 10 funds representing 10 sectors , put all the 10 funds in one fund and be done with it? I know there are Asset Allocation funds but they seem to underperform the simple S&P index fund.

One of the cool things about diverse asset allocation is that they need to be kept in balance (at least couple of times/year). Why is that a good thing? Because it guarantees that you routinely sell high and buy low, as opposed to the traditional approach of selling off the dogs and buying new red-hot deals, which guarantees the opposite. ;-{>8