Mutual Fund Outflows Surge

[Hobbyfarmer]

After Downgrade

Published August 17, 2011
| Reuters


U.S. mutual funds had the largest outflows in nearly three years in the wake of the downgrade of the U.S. credit rating by Standard & Poor's, data from the Investment Company Institute showed Wednesday.

Investors pulled a net $40.3 billion out of those funds in the week ended Aug. 10, the largest weekly withdrawal since early October 2008, soon after the collapse of Lehman Brothers. Equity funds lost a total of $30 billion in the same period, their worst performance since late January 2008, said ICI, a U.S. mutual fund trade organization.

Domestic equities had the second highest net outflows since ICI started compiling weekly data in 2007. The estimated data captures withdrawals after the U.S. credit rating downgrade by Standard & Poor's on Aug. 5.

[Hobbyfarmer]

I AM JUST WONDERING...is there any intrest in a section here just for stocks, bonds, investing? The majority of the Ag Talk "rejects" are young enough that they are still struggling with getting a date or raising a young family. This learning and blundering around in the dark with no outside input except from a high commisioned "broker" sucks and will usually leave a sour after taste.

Any do it yourselfers out there?

[glowplug]

Switched a lot from the mutual funds to index funds several years ago, bought another farm (certainly better than money in the mutual fund would have performed, at least I'll have the land). Invested heavily in brass-lead. Not sure if there's any "safe" plan to retire on anymore but we've tried.

[looter]

"I invest in an IRA because I do not think social security will remain solvent."

Ever hear that one? What kind of twisted logic is that? Do you really think that a world in which old people, the largest demo group, are starving enmasse while your private retirement nest egg grows merrily along?

If you don't believe social security is gonna be around for your retirement, then how can you possibly believe a Roth IRA will be? Governments confiscate Private Retirement accounts all the time once push comes to shove. Ours will be no differant. All that Red Tape surrounding IRAs is there for a reason. Already they are nothing but glorified Public Accounts.

[feelnrite]

Aug 18, 2011 6:11:03 GMT -5 Hobbyfarmer said:

I AM JUST WONDERING...is there any intrest in a section here just for stocks, bonds, investing? The majority of the Ag Talk "rejects" are young enough that they are still struggling with getting a date or raising a young family. This learning and blundering around in the dark with no outside input except from a high commisioned "broker" sucks and will usually leave a sour after taste.

Any do it yourselfers out there?

Count me in on the interest in the page for stocks and investing. I need to be doing better if it is possible. About had enough of the white collared crooks.

[iowa55]

I have approached Marland about it and have been in some good discussions on another now defunct site.

I believe it could be interesting and informative if done right and taken for what you paid for it but some of the best things I've done have come from comment boards and talk among friends etc.

The biggest screwovers I have been involved in have come from "professionals" and stockbrokers who after the fact I could see were ONLY in it for the immediate commissions coming their way.

It could work fine if all involved just asked good honest questions and gave their best guess answers, and suggestions. NO WARRANTIES included with any of the comments.

All in favor of having TWO marketing threads

1) one for the AG related things

2) one for the STOCKS, BONDS, FUNDS etc.

[iowa55]

INVESTING
JULY 25, 2010.

Ten Stock-Market Myths That Just Won't Die .
By BRETT ARENDS
The Dow Jones Industrial Average last week ended up pretty much where it had been a little more than a week earlier. A rousing 200-point rally on Wednesday mostly made up for the distressing 200-point selloff of the previous Friday.

The Dow plummeted nearly 800 points a few weeks ago -- and then just as dramatically rocketed back up again. The widely watched market indicator is down 7% from where it stood in April and up 59% from where it was at its 2009 nadir.


Andy Rash
.These kinds of stomach-churning swings are testing investors' nerves once again. You may already feel shattered from the events of 2008-2009. Since the Greek debt crisis in the spring, turmoil has been back in the markets.

At times like this, your broker or financial adviser may offer words of wisdom or advice. There are standard calming phrases you will hear over and over again. But how true are they? Here are 10 that need extra scrutiny.

1 "This is a good time to invest in the stock market."
Really? Ask your broker when he warned clients that it was a bad time to invest. October 2007? February 2000? A broken watch tells the right time twice a day, but that's no reason to wear one. Or as someone once said, asking a broker if this is a good time to invest in the stock market is like asking a barber if you need a haircut. "Certainly, sir -- step this way!"

2 "Stocks on average make you about 10% a year."
Stop right there. This is based on some past history -- stretching back to the 1800s -- and it's full of holes.

About three of those percentage points were only from inflation. The other 7% may not be reliable either. The data from the 19th century are suspect; the global picture from the 20th century is complex. Experts suggest 5% may be more typical. And stocks only produce average returns if you buy them at average valuations. If you buy them when they're expensive, you do a lot worse.

3 "Our economists are forecasting..."
Hold it. Ask your broker if the firm's economist predicted the most recent recession -- and if so, when.

The record for economic forecasts is not impressive. Even into 2008 many economists were still denying that a recession was on the way. The usual shtick is to predict "a slowdown, but not a recession." That way they have an escape clause, no matter what happens. Warren Buffett once said forecasters made fortune tellers look good.

4 "Investing in the stock market lets you participate in the growth of the economy."
Tell that to the Japanese. Since 1989 their economy has grown by more than a quarter, but the stock market is down more than three quarters. Or tell that to anyone who invested in Wall Street a decade ago. And such instances aren't as rare as you've been told. In 1969, the U.S. gross domestic product was about $1 trillion, and the Dow Jones Industrial Average was at about 1000. Thirteen years later, the U.S. economy had grown to $3.3 trillion. The Dow? About 1000.

5 "If you want to earn higher returns, you have to take more risk."
This must come as a surprise to Mr. Buffett, who prefers investing in boring companies and boring industries. Over the last quarter century, the FactSet Research utilities index has even outperformed the exciting, "risky" Nasdaq Composite index. The only way to earn higher returns is to buy stocks cheap in relation to their future cash flows. As for "risk," your broker probably thinks that's "volatility," which typically just means price ups and downs. But you and your Aunt Sally know that risk is really the possibility of losing principal.

6 "The market's really cheap right now. The P/E is only about 13."
The widely quoted price/earnings (PE) ratio, which compares share prices to annual after-tax earnings, can be misleading. That's because earnings are so volatile -- they're elevated in a boom, and depressed in a bust.

Ask your broker about other valuation metrics, like the dividend yield, which looks at the dividends you get for each dollar of investment; or the cyclically adjusted PE ratio, which compares share prices to earnings over the past 10 years; or "Tobin's q," which compares share prices to the actual replacement cost of company assets. No metric is perfect, but these three have good track records. Right now all three say the stock market's pretty expensive, not cheap.

7 "You can't time the market."
This hoary old chestnut keeps the clients fully invested. Certainly it's a fool's errand to try to catch the market's twists and turns. But that doesn't mean you have to suspend judgment about overall valuations.

If you invest in shares when they're cheap compared to cash flows and assets -- typically this happens when everyone else is gloomy -- you will usually do very well.

If you invest when shares are very expensive -- such as when everyone else is absurdly bullish -- you will probably do badly.

8 "We recommend a diversified portfolio of mutual funds."
If your broker means you should diversify across things like cash, bonds, stocks, alternative strategies, commodities and precious metals, then that's good advice.

But too many brokers mean mutual funds with different names and "styles" like large-cap value, small-cap growth, midcap blend, international small-cap value, and so on. These are marketing gimmicks. There is, for example, no such thing as "midcap blend." These funds are typically 100% invested all the time, and all in stocks. In this global economy even "international" offers less diversification than it did, because everything's getting tied together.

9 "This is a stock picker's market."
What? Every market seems to be defined as a "stock picker's market," yet for most people the lion's share of investment returns -- for good or ill -- has typically come from the asset classes (see No. 8, above) they've chosen rather than the individual investments. And even if this does turn out to be a stock picker's market, what makes you think your broker is the stock picker in question?

10 "Stocks outperform over the long term."
Define the long term? If you can be down for 10 or more years, exactly how much help is that? As John Maynard Keynes, the economist, once said: "In the long run we are all dead."

[48]

Hobby: I hope you get your new thread rolling. Actually, you have already done it...without a formal category. There are thousands of discussion boards out there on equities. Mutual funds are dinosaurs. ETF's are the only way to go. With the exception of GLD, SLV, SPY, and DIA one should familiarize with ProShares and PowerShares. You can go long or short.

You can not be a successful grain/cattle trader without knowing what outside markets are doing: crude oil, dollar, gold, Dow/500. IMHO, you should always be invested in these outside markets...long or short as appropriate...to force yourself to pay attention to them for any impact on grains/cattle...even if it's just a minimum position.

Now...maybe Grainbelt will post some good advice. He is a world class equities trader.

[48]

Steve Jobs has stepped down at Apple. He actually owns more stock in Disney than his own company. He is the largest share holder of Disney.

[48]

Anybody who wants to trade equities should at bare minimum have Barron's/WSJ online. Agora Financial is worthless. All they are good at is marketing newsletters with no tradable advice. I subscribe to lots of investment newsletters, but actually...Barron's gives some of the best advice...along with an occasional lulu. lol. I recommend people visit the websites of stansberryrearch and caseyresearch, and subscribe to whatever interests them. I already told JR how to get Ed Steer's Gold&Silver Daily e-mail for free. This is free, and if it wasn't, I would gladly pay for it. There are lots of good URL's each day to other good sites like Sprott, ZeroHedge, Motley Fool, Financial Times, etc.

[48]

stansberryresearch's 12% Letter talks about World Dominator stocks that pay good dividends. On any stock they all have 52 wk HI/LO. Make sure you are buying on the lows. And, then hold them forever. And, if we go into another recession ala Mar 2009, buy more. caseyresearch has an interesting concept...the Casey Free Ride. In simplest terms, this means when a stock appreciates considerably, you take your original investment out and let the rest ride. It is like playing Black Jack in Vegas. You start out with say $100. When you are up to to $200, you take your original $100 off the table and play with the house's money.

But, my best advice is to buy good high dividend stocks on their lows and hold them forever. If we have another Mar 2009 and everything goes down...including good stocks...back up the truck and buy more.

A good example is the pipeline Master Limited Partnership...Enterprise Partners=EPD.

[48]

BTW...some of the best investment advice out there is free. For example, if you subscribe to stansberryresearch's 12% Letter, you will automatically get Daily Crux, Daily Wealth, Growth Stocks, S&A Advisory, etc. via e-mail each day for free, and they are full of URL's to other sites and good advice. Just get good at Speed Deleting. lol. But, every once in a while, you will get a really good idea.

[Grainbelt]

Aug 27, 2011 10:02:09 GMT -5 48 said:

Steve Jobs has stepped down at Apple. He actually owns more stock in Disney than his own company. He is the largest share holder of Disney.

When Jobs was relieved of his duties with Apple, years ago he started Pixar. Jobs large holding of Disney shares come from their buyout of Pixar. He took Disney shares in exchange for his shares of Pixar.

[jabber1]

Aug 26, 2011 20:15:58 GMT -5 iowa55 said:

I have approached Marland about it and have been in some good discussions on another now defunct site.

I believe it could be interesting and informative if done right and taken for what you paid for it but some of the best things I've done have come from comment boards and talk among friends etc.

The biggest screwovers I have been involved in have come from "professionals" and stockbrokers who after the fact I could see were ONLY in it for the immediate commissions coming their way.

It could work fine if all involved just asked good honest questions and gave their best guess answers, and suggestions. NO WARRANTIES included with any of the comments.

All in favor of having TWO marketing threads

1) one for the AG related things

2) one for the STOCKS, BONDS, FUNDS etc.

GOOD IDEA. IMHO- farm operators are great at what they do but likely as they age reinvest too many of their hard earned eggs back in the farm basket. Just ask any crop farmer from our region that was due to retire in the late 1980s or early 1990s.