-=PCTechTalk=- Re: offtopic,mutual fund questions

  • From: Gman <gman.pctt@xxxxxxxxx>
  • To: <pctechtalk@xxxxxxxxxxxxx>
  • Date: Sun, 1 Feb 2009 19:53:24 -0500

Cristy,
    Using email, I don't have the means to pour over your investments to 
help you determine the answers you're seeking here.  However, I'm a little 
confused myself as to why you have both a financial advisor AND a portfolio 
guide service.  Since you initially asked about mutual funds, you ALSO have 
the already paid-for services of the mutual fund's managers, which is a 
group of advisors who's job security depends on how well they can predict 
the market and make money for you.

    If you really think about it, the only folks who's own financial future 
is truly linked with yours is with the mutual fund management team.  They 
also have more insider insight into what's going on behind the scenes before 
they make changes to their portfolio.  You can pull out of the agreements if 
you're not happy with the performance/advice you get from your advisor &/or 
the portfolio guide service, but that doesn't threaten their business. 
They'll still have plenty of other clients and they'll lose very little. 
However, it's VERY much in a mutual fund manager's favor to always stay on 
top of everything in their area of expertise in order to keep their job.  If 
they fail the fund, they're fired and lose everything.  For this reason, the 
safest bet is always going to be on a well managed mutual fund.  Just keep i 
mind that there are different types of funds with some focusing primarily on 
stocks and quick turnarounds, others that divest between stocks and bonds 
(both tend to move in different directions depending on the overall 
finanical climate), some that focus on divident producing investments, some 
that focus more on overseas opportunities, etc..  To that end, not all funds 
are right for all investors, so be sure you're comfortable with the type of 
fund approach that you're money is going to.  Also, compare different funds 
of the type you wish to use to make sure the one(s) you use have been well 
managed over a long period of time.  Some will obviously have better 
performance than others.

    Having said that, several other thoughts still come into play here. 
Some are universal and some apply specifically to your situation.

    Universally, those who are in control of the overall financial picture 
of the world have made some mighty huge long-term errors (it can be traced 
back at least to the US government's establishment of the Federal Reserve 
Bank, but I'll argue that it goes back quite a bit further than that) and 
brought about the present worldwide financial crisis.  As a result, even 
large businesses are losing tons of money.  Some have already gone under and 
some others won't be around much longer.  It's during times like these that 
we'll see more and more consolidation as some better off businesses will do 
all they can to buy up their not-so-financially-healthy competition.  As 
competition lessens, prices go up and that just makes things worse for 
regular folks like you and me.  As folks like us have less to spend, we buy 
less and that affects ALL businesses, but especially those who specialize in 
non-essential services such as home improvement contractors (heat is more 
important than home improvement), restarants (folks eat at home more often), 
entertainment (who has money for going to the movies of theater these 
days?), etc..  Since small businesses are the true economy movers (much more 
overall money trades hands through small businesses than through large 
corporations), THIS situation is what's going to force the various world 
governments' hands more than anything into forcing the money controllers to 
turn things around again.  If many more of our small businesses go under due 
to lack of customers, some countries (including the US) could collapse in on 
themselves and we'll all lose much more than our money.  I appologize if any 
of this is making you more nervous that you already were.

My apologies to anyone following this thread who is not a US citizen, but 
I'm going to focus specifically on the US for the next couple of paragraphs.

    As I see it, the US government is WAY too big, spends WAY too much on 
nearly worthless endeavors where they don't belong in the first place and 
they don't even have any of their OWN money (they don't produce anything, so 
how can they earn money?).  It's the taxpayer's money that they're spending 
on so many things we, the people, simply don't need.  They need to start 
spending our money on things that will create new jobs and put those in need 
back to work.  Individual states try to brag about how they were able to 
create 12,000 new jobs last year, but they fail to mention that 130,000 old 
jobs were 'repositioned' overseas.  Of course, that's great news for the 
other countries that received the jobs, but the losses here are a rather 
significant part of what's hurting our economy, and that's on top of the 
already straining financial market caused by the gov't printing too much 
money to fund their various wars and skirmishes around the world in the name 
of "democracy".

    The reason why I bring all of this up is not to frighten you.  It's to 
try and explain that there's a lot more to the financial health of your 
portfolio than just how well some guy picks out stocks, bonds, etc..  Until 
the world's government leadership makes most of the changes needed to turn 
things around (here in the US that responsibility falls on Congress, not the 
president), our collective portfolios will not be able to fully rebound from 
the damage already caused by so many dumb laws, ignorant (but usually 
intentional) loopholes and money wasted on things that aren't in the best 
interest of the people providing that money.  So far, Obama appears to be 
doing all he can to lead the charge towards turning things around, but he's 
going to need a lot more firepower than just his presidency to get things 
done in a hurry.  He's not the one with any real power to make changes to 
the laws that have allowed lenders to pillage us for years.  Again, that 
responsibility falls to the lawmakers and they are not hearing enough 
warnings from the people who pay their salaries and elect them into 
positions within the Senate and House of Representatives.  In fact, most 
folks seem to think that the responsibility falls on the presiding 
president.  Since they tend to take their frustrations out on the president, 
Congress doesn't even get to hear them.  If everyone would direct their 
displeasure at their own representatives in Congress, we'd see a LOT more 
things 'fixed' in a really short amount of time.  It would also give Obama 
plenty of fuel & momentum to really push them into taking things off the 
books that have been hurting the country (such as the laws that currently 
allow credit card issuers to continue gouging us with ridiculous rates, fees 
and penalties for the next 17 months or so).  If you want to help the 
country get back on track, research the issues and get in touch with the 
folks who make the laws we all have to follow.  It's the only way to make 
sure the laws actually work FOR us instead of AGAINST us.  If we don't do it 
ourselves, the only voices the lawmakers will continue to hear are those of 
the lobbyists, and they only care about the folks who hired them.

Ok, that should be enough of the world/US news to give you a wider view of 
why things aren't going so well right now.  So let's talk about your own 
situation some more.

    If your personal financial advisor has never given you any reason to 
doubt his/her advice (never intentionally stung you), I would suggest 
spending a little time with that person discussing your options.  In order 
to sell that kind of service, they must pass a relatively long test to show 
that they understand each of the options available to their customers. 
While it's definitely not the same thing as going to law school for 4 years, 
it still ensures that they are up to date on what's available to their 
clients and that's more than I can say for myself, having been out of that 
business for nearly 20 years (things change every year).  I tend to agree 
with the advice to stay away from portfilio guide services unless you plan 
to use them as your primary financial advisor.  You don't need two of them 
unless you're rich and want to split up your investments among several 
services.  But if you're rich, you'd hire one to only work for YOU and 
forget all of that.  Unlike a service, his/her job would then depend on 
their ability to keep your money growing.      lol

    Take along a small tape recorder and ask them for permission to tape the 
session before you begin.  That way, you'll be able to relisten to the 
conversation, research any items or topics that need to be clarified, look 
up and compare specific investment ideas they mention and finally make an 
informed choice about how you'll weather out the remainder of this financial 
storm.  It's great to have faith in someone else making educated suggestions 
(like you have with me), but nothing beats knowing what's going on when it 
comes to that kind of a relationship.  I know this appears to be the 
opposite of what I said yesterday, but the difference is that you're putting 
your faith in a single person who doesn't need to perform at peak 
performance in order to stay in business as opposed to a more diversified 
fund management team who MUST get the best returns on the investment money 
they handle.  Of course, if they're investing your money in mutual funds, 
you're hopefully getting the best of both worlds.

Peace,
Gman

http://www.bornagainamerican.org
"The only dumb questions are the ones we fail to ask"

----- Original Message ----- 
From: "cristy" <poppy0206@xxxxxxxxxxxxx>
To: <pctechtalk@xxxxxxxxxxxxx>
Sent: Sunday, February 01, 2009 5:46 PM
Subject: -=PCTechTalk=- Re: offtopic,mutual fund questions


> HI Gman,
>
> I must admit I am a bit uneducated in all of this but have put faith in my
> financial advisor.  Under normal circumstances, I would know I will be
> working for at least ten more years so would make sense to leave it in.
> But, there is a possibility I could become disabled before then possibly 
> to
> the point of not being able to work, so this part is a little risky for 
> me.
>
> I also am somewhat confused about this portfolio guide service they 
> offered
> that I went ahead and signed up for again on my advisor's advise.  I pay
> about $50.00 bucks a year and the powers to be decide best where to put my
> money.  It also gives you projections or something too.  I had noticed my
> money in the +gain side before I went to this service, coincidence, I 
> don't
> know.  But for the past year and one half have seen all -loss signs in my
> total amount of my funds.  I did do one withdrawal a few years back but 
> was
> for a good reason and this was agreed that it was with my advisor.  To buy
> back service credit at a very good rate at the time.
>
> I have steadily increased my monthly amounts going in also.  I am 
> wondering
> how did they determine where to put the money before the guided portfolio
> service and was it doing better then since I was seeing more gains than
> losses.
>
> christy 

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