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[RevoDS]

What studies are these? Because I definitely am not going to buy that without a serious study. 10-15 seems way too low. Personally, I really see no reason to risk going after Alpha when you can slowly accumulate plenty of money over the long term so long as you just follow the market.

You might like his investment theories then since he heavily favors investing in high risk sectors such as small cap value and diversifying risk to hit small value, large, and beta while allocating a greater percentage of the portfolio to bonds. Basically, so you wont take a big hit in a bear while getting good returns in a bull.

Like I said, i dont have that data. And since the article is referencing a study conducted by a group for his firm, you'll likely have to pay to see it or ask him in that thread I posted and he'll should be better able to defend this than I can

Perhaps not the study you're looking for, but since I don't have a computer handy, this should explain the mathematical concept pretty well: http://www.investopedia.com/articles/01/051601.asp. I will admit that memory failed me here, the actual number appears closer to 20, although the point stands nonetheless

Also, as a matter of fact, I generally don't like small caps because most of them are either lower quality companies based on fundamentals, or utterly overvalued. I'm not saying there aren't good small companies, but the good ones are drowned in a sea of unprofitable, crappy companies due to the sheer amount of them.

 

[Piecake]

Perhaps not the study you're looking for, but since I don't have a computer handy, this should explain the mathematical concept pretty well: http://www.investopedia.com/articles/01/051601.asp. I will admit that memory failed me here, the actual number appears closer to 20, although the point stands nonetheless

Also, as a matter of fact, I generally don't like small caps because most of them are either lower quality companies based on fundamentals, or utterly overvalued. I'm not saying there aren't good small companies, but the good ones are drowned in a sea of unprofitable, crappy companies due to the sheer amount of them.

The study mentioned above isn't suggesting that buying any 20 stocks equates with optimum diversification. Note from our original explanation of diversification that you need to buy stocks that are different from each other whether by company size, industry, sector, country, etc. Put in financial parlance, this means you are buying stocks that are uncorrelated – stocks that move in different directions during different times.

As well, note that this article is only talking about diversification within your stock portfolio. A person's overall portfolio should also diversify among different asset classes, meaning allocating a certain percentage to bonds, commodities, real estate, alternative assets and so on.

I think this is important and makes sense. It can't be twenty random stocks. those 20 stocks have to actually be diversified.

The common consensus is that a well-balanced portfolio with approximately 20 stocks diversifies away the maximum amount of market risk. Owning additional stocks takes away the potential of big gainers significantly impacting your bottom line, as is the case with large mutual funds investing in hundreds of stocks. According to Warren Buffett: "wide diversification is only required when investors do not understand what they are doing". In other words, if you diversify too much, you might not lose much, but you won't gain much either.

I would disagree with this, and Warren Buffet would too. You are gaining market return, which over a long period of time ends up being a lot.

Personally, I still think 20 stocks is too low because you'd have to make sure that those twenty stocks are actually good and fall somwhere in the bands of their sector. While I would agree that there is a great deal of diminishing returns when it comes to diversification, I have a hard time buying it that its 20. Especially when this article is talking about alpha returns. Well, you can't have alpha returns without the risk of loses. You might be pretty well diversified, but that sure doesnt mean that you can't get below market returns.

 

[RevoDS]

I think this is important and makes sense. It can't be twenty random stocks. those 20 stocks have to actually be diversified.



I would disagree with this, and Warren Buffet would too. You are gaining market return, which over a long period of time ends up being a lot.

Personally, I still think 20 stocks is too low because you'd have to make sure that those twenty stocks are actually good and fall somwhere in the bands of their sector. While I would agree that there is a great deal of diminishing returns when it comes to diversification, I have a hard time buying it that its 20. Especially when this article is talking about alpha returns. Well, you can't have alpha returns without the risk of loses. You might be pretty well diversified, but that sure doesnt mean that you can't get below market returns.

Now it's just common sense that if your 20 stocks are in the same sector, you aren't diversified enough...that's not my point and you know it.

And of course you can get below market returns. Since you aren't pegged to the market, there will indeed be periods of outperformance and underperformance. But that's not risk. All that diversification does is diminish the risks related to one particular stock or sector, and it is suggested that 20 stocks would be enough to alleviate almost all of it. The actual risk is almost entirely related to market direction, and no amount of diversification will help that.

Also, I'm surprised you'd use Warren Buffett as an example given that he's one of the most notorious stock pickers in the world...not exactly a great example of index investing

 

[Piecake]

Now it's just common sense that if your 20 stocks are in the same sector, you aren't diversified enough...that's not my point and you know it.

And of course you can get below market returns. Since you aren't pegged to the market, there will indeed be periods of outperformance and underperformance. But that's not risk. All that diversification does is diminish the risks related to one particular stock or sector, and it is suggested that 20 stocks would be enough to alleviate almost all of it. The actual risk is almost entirely related to market direction, and no amount of diversification will help that.

Also, I'm surprised you'd use Warren Buffett as an example given that he's one of the most notorious stock pickers in the world...not exactly a great example of index investing

I wasnt implying that you were making that claim. I was just pointing that out to myself, though id imagine those 20 stocks would have to be in almost or all of the sectors, sizes, and markets. As for the 20 stocks, I simply dont buy it. I think that is much too small to eliminate almost all of the risk excluding market direction while still giving you a chance to get alpha returns. Now, maybe im misunderstanding something in that sentence, but that seems too good to be true. And i dont buy things that are too good to be true

Warren Buffet would disagree that you wouldnt gain much by simply following the market. That's why I bolded that sentence specifically

http://www.youtube.com/watch?v=idr6c8NHuWs

I mean, why would he continually advocate that people simply buy and hold index funds if he didnt think that they would get a decent return?

 

[Husker86]

When looking at fund performance, when they say 5-year/10-year/since inception returns, are the percentages yearly averages of those time periods?

I ask because many of the funds available in my 403(b) look good for the YTD/1-year, but the longer ones seem low if it's overall. For example, A "Past 10-years Total Return at NAV" on one of the options is 12.51% which seems shitty if it's over 10 years, but good if it's average yearly gains.

I'm assuming it's average yearly but I just want to make sure.

 

[RumblingRosco]

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[Piecake]

When looking at fund performance, when they say 5-year/10-year/since inception returns, are the percentages yearly averages of those time periods?

I ask because many of the funds available in my 403(b) look good for the YTD/1-year, but the longer ones seem low if it's overall. For example, A "Past 10-years Total Return at NAV" on one of the options is 12.51% which seems shitty if it's over 10 years, but good if it's average yearly gains.

I'm assuming it's average yearly but I just want to make sure.

Personally, I think the best way to predict fund performance is look at the expense ratio and ignore previous returns. Fund being properly diversified too is important. Google an expense calculator and you'll be surprised how much money fees eat into your returns

 

[Husker86]

Personally, I think the best way to predict fund performance is look at the expense ratio and ignore previous returns. Fund being properly diversified too is important. Google an expense calculator and you'll be surprised how much money fees eat into your returns

Yeah, there is one Vanguard fund available in my 403b with an expense of 0.05%. I made a large chunk of my deferral go to that now. Almost every other option is 0.6% or higher, with many above 1%.

 

[Piecake]

Yeah, there is one Vanguard fund available in my 403b with an expense of 0.05%. I made a large chunk of my deferral go to that now. Almost every other option is 0.6% or higher, with many above 1%.

my 401k is the same. I dump it all into the .05 vanguard fund and then diversify in my Roth

 

[Zaraki_Kenpachi]

Personally, I think the best way to predict fund performance is look at the expense ratio and ignore previous returns. Fund being properly diversified too is important. Google an expense calculator and you'll be surprised how much money fees eat into your returns

How exactly do you determine future returns off of the expense ratio?

 

[Piecake]

How exactly do you determine future returns off of the expense ratio?

You don't. You just know that .05% is being taken away and not 1%. There was an article in the NY Times that said those fees could be a lot higher as well because the cost of buying and selling stocks (turnover) isnt included in the expense ratio. I think the article said the average was about 1.5 or something. So add that to the 1%...

 

[Zaraki_Kenpachi]

You don't. You just know that .05% is being taken away and not 1%. There was an article in the NY Times that said those fees could be a lot higher as well because the cost of buying and selling stocks (turnover) isnt included in the expense ratio. I think the article said the average was about 1.5 or something. So add that to the 1%...

You just said you think the best way to predict fund performance is to look at the expense ratio and ignore returns... How are you predicting the returns of the fund then?

 

[Piecake]

You just said you think the best way to predict fund performance is to look at the expense ratio and ignore returns... How are you predicting the returns of the fund then?

You are predicting your returns, not the return of the fund (looks like I wrote it wrong at first). I have no idea what the market is going to do in the future, so the best way to get the best return if you are investing in funds is to select one that has a very low expense ratio and then develop a diversified portfolio

 

[Ether_Snake]

When looking at fund performance, when they say 5-year/10-year/since inception returns, are the percentages yearly averages of those time periods?

I ask because many of the funds available in my 403(b) look good for the YTD/1-year, but the longer ones seem low if it's overall. For example, A "Past 10-years Total Return at NAV" on one of the options is 12.51% which seems shitty if it's over 10 years, but good if it's average yearly gains.

I'm assuming it's average yearly but I just want to make sure.

It's yearly return if it covers more than a year, actual return if it covers less than a year.

I never care about this, it means nothing. I could have had only 1 dollar invested for years, and thousands in the last year alone, and it wouldn't tell me much. I got a 29% return on my 401k since last year, but who knows when the return really took place: last three months? 12 months? Who knows.

 

[Husker86]

It's yearly return if it covers more than a year, actual return if it covers less than a year.

I never care about this, it means nothing. I could have had only 1 dollar invested for years, and thousands in the last year alone, and it wouldn't tell me much.

Yeah I guess I understand. It is just comforting to me to see a fund have consistent performance, though I suppose any diversified fund in the same sector should have similar returns. I'm pretty new to investing so I'll have some bad habits/ideas to get rid of.

 

[Ether_Snake]

Yeah I guess I understand. It is just comforting to me to see a fund have consistent performance, though I suppose any diversified fund in the same sector should have similar returns. I'm pretty new to investing so I'll have some bad habits/ideas to get rid of.

Oh yeah for selecting a fund that's what I did. Worked for me. Fact is, if I invested in my taxable account like I did for my RRSP/401k, I would have made great money. I don't think past performance is a bad indicator. All my winner stocks were chosen in part on that. Look at NKE, MCD, etc.

edit: I meant that looking at those numbers for the return performance of my portfolio is useless, not the funds.

 

[RumblingRosco]

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[FlashFlooder]

Any suggestions for short-term, low-risk investments? I tend to keep money in my savings account as "oh shit" money; in case my car gets totaled, for example, because then I can at least buy a decent used car without having to sell off any long-term investments. I'm not talking tens of thousands, but a few thousand, "just in case." With that said, I'm wondering if there are any low-risk investments that I can put that money into to make a tiny bit more than the 0.25% I'm getting in interest while it sits there.

I guess I'm thinking short-term CDs would be the best option... Discover offers 0.40% on a 3-month CD, which is better than my .25% I'm getting right now through my savings account. I've looked into money market accounts, but nothing really worthwhile seems to be popping up for me. Any options I might be missing?

CD's are a waste of time in a low-interest environment. Current savings APY at Ally Bank is 0.84%, so my suggestion would be to switch to a better bank.

In fact, interest rates are so low right now that I'm looking at ways to take on more debt (HELOC, mortgaging land/property).

 

[RumblingRosco]

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[Sanky Panky]

Yeah, while your young, starting out, the few thousands in emergency savings, is just that, cash. I guess the goal there is to lose the less purchasing power possible, but good luck with that.

Your earnings potential from work is the biggest asset in your portfolio for now. Your biggest growth from your assets right now will come from how much you can save.

 

[Onion_Relish]

I don't mean to interrupt, but if some people here wouldn't mind sharing their opinions on a few stocks ive been monitoring that would be neat.

Take two: ttwo - over the last 5 years they have reliably bottomed out in june and peaked around october. I think with gta 5 coming out there are at least 3-4 points that can be squeezed before you get out.

Sony: sne - they are due for a summer tanking as well I feel, not due to precedent but simply because they still aren't making money. Consumer sentiment and hope proir to christmas I think will be high enough for a buy around 14-16 up to about 18-20 before an inevitable correction.

BlackBerry: bbry - I know everyone is on death watch but even now at 14.8 I think they can make it back to 17 on hopes for the q10 alone. Once that tanks bail out.

Thoughts, concerns,

 

[RumblingRosco]

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[Piecake]

I don't mean to interrupt, but if some people here wouldn't mind sharing their opinions on a few stocks ive been monitoring that would be neat.

Take two: ttwo - over the last 5 years they have reliably bottomed out in june and peaked around october. I think with gta 5 coming out there are at least 3-4 points that can be squeezed before you get out.

Sony: sne - they are due for a summer tanking as well I feel, not due to precedent but simply because they still aren't making money. Consumer sentiment and hope proir to christmas I think will be high enough for a buy around 14-16 up to about 18-20 before an inevitable correction.

BlackBerry: bbry - I know everyone is on death watch but even now at 14.8 I think they can make it back to 17 on hopes for the q10 alone. Once that tanks bail out.

Thoughts, concerns,

I would be super concerned about your BBRY. The risk-reward is totally not worth it. Buy a REIT if you are just looking for 10-15% return. Be warned, most of them are overpriced

As for the other ones, you need to be aware that all of that (99% sure) has been factored into the price already. You need to dig deeper than GTA5 coming out or a christmas boom will jack up the price of the stock. What will jack up the price is if GTA5 and the PS4 sell much better than expected, but simply coming out is not going to do it

 

[Deleted member 13876]

Stumbled upon this article today, thought it was fairly interesting.

http://www.resourceinvestor.com/201...s-when-theres-blood-in-the-stre?t=base-metals

Basically makes an argument that now is a good time to get into the metals market. It's at a really low point, and scarcity and demand is going to rise as developing countries keep expanding. Anyone more knowledgeable on the subject?

 

[Ether_Snake]

Yeah I get the same feel about metals, but I'm already invested in it. When they say gold is awesome on the news, it usually means you should sell. When they say the opposite, it might be a good time to buy. Personally I'm comfortable getting in at this price, I'm just pissed I got a fund I'm down 20% on in metals beyond two other ETFs. Want to get rid of that one but I know I can wait it out.

 

[Piecake]

Yeah I get the same feel about metals, but I'm already invested in it. When they say gold is awesome on the news, it usually means you should sell. When they say the opposite, it might be a good time to buy. Personally I'm comfortable getting in at this price, I'm just pissed I got a fund I'm down 20% on in metals beyond two other ETFs. Want to get rid of that one but I know I can wait it out.

Don't know if this is applicable in Canada, but another good thing about funds is that you can tax-loss harvest very easily since you can then just dump your money into a similar, but not the same fund

So Total Stock Market to SP 500 would work, but Vanguard Total stock to Fidelity Total stock wouldnt

http://www.bogleheads.org/wiki/Tax_Loss_Harvesting

Might be something to look into if you can find another metal fund that isnt a wash sale with yours (and this actually makes sense in Canada) Obviously this only makes sense in a taxable account as well

 

[Ether_Snake]

Don't know if this is applicable in Canada, but another good thing about funds is that you can tax-loss harvest very easily since you can then just dump your money into a similar, but not the same fund

So Total Stock Market to SP 500 would work, but Vanguard Total stock to Fidelity Total stock wouldnt

http://www.bogleheads.org/wiki/Tax_Loss_Harvesting

Might be something to look into if you can find another metal fund that isnt a wash sale with yours (and this actually makes sense in Canada) Obviously this only makes sense in a taxable account as well

Ah makes sense. Never saw it that way.

But what you mean by "if you can find another metal fund that isnt a wash sale with yours"?

 

[Piecake]

Ah makes sense. Never saw it that way.

But what you mean by "if you can find another metal fund that isnt a wash sale with yours"?

If you sell a mutual fund or stock for less than the purchase price, you have a capital loss, and you can usually report this as a loss and subtract it from your income. However, if you sold the shares and then bought them right back, or bought new shares and then immediately sold the old shares, the IRS will rule that you did not really sell them, and will not allow you to deduct the loss at that time.

Here is the official definition from IRS Publication 550:

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

-Buy substantially identical stock or securities,
-Acquire substantially identical stock or securities in a fully taxable trade, or
-Acquire a contract or option to buy substantially identical stock or securities.
-If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.

Note the "at a loss"; if you sell at a gain, you cannot have a wash sale, and must report the gain on your taxes even if you buy back the same stock later.

http://www.bogleheads.org/wiki/Wash_sale

Again, I have no idea if Canada does this.

The example i use is if you sell Total stock market at a loss and buy SP 500 you can deduct the TSM loss from your taxes. If you sell TSM and buy a TSM from a different company that is considered a wash sale and you won't get any tax benefit

 

[Ether_Snake]

Ah I see, good to know. Thanks!

 

[Piecake]

Along with my index funds, I do have a small percentage of my account set aside for fun stock bets. I am definitely going to phase that out pretty soon though, cause I really don't find them all that fun, haha

MM is just absolutely killing me. I thought mobile/app ads would be a growing, profitable business. NOPE. At this point, I am just keeping it around for tax purposes. And who knows, it might turn around...

Luckily STAG and TLLP are doing fantastic, which is actually giving my fun money portion a decent return than a total tank, but man, id rather just sit on my ass and not worry about it with an index than worry about individual stocks. And yea, I know that stock like MM are more risky than the blue chips

 

[TheChewyWaffles]

Any recommendations on a good broker in the US?

 

[Ether_Snake]

Along with my index funds, I do have a small percentage of my account set aside for fun stock bets. I am definitely going to phase that out pretty soon though, cause I really don't find them all that fun, haha

MM is just absolutely killing me. I thought mobile/app ads would be a growing, profitable business. NOPE. At this point, I am just keeping it around for tax purposes. And who knows, it might turn around...

Luckily STAG and TLLP are doing fantastic, which is actually giving my fun money portion a decent return than a total tank, but man, id rather just sit on my ass and not worry about it with an index than worry about individual stocks. And yea, I know that stock like MM are more risky than the blue chips

There are companies I always made a lot of money just by buying based on chart movement. TTWO, EA, ADSK. With ADSK I always sold at around 40, and bought when it was at least 15% down from 40. That's usually the approach I took.

 

[Ether_Snake]

Posted in another thread. I did a comparison of the bubble trend chart to Apple's stock:

Yeah, I bought in the bull trap

If I apply the same to the price of gold, we are at "fear". DDD would be in the bull trap.

Interesting.

 

[systemfehler]

I just had a discussion with someone from my bank encouraging me to invest some money on a monthly base (~100€). Now I got a few recommendations for investment funds. I did some research and compared performance for 1/3/5 years, checked how the money is distributed, calculated some historic values and combinations, etc.

Now I am a beginner and I have to rely on the things the bank clerk tells me. However I don't see the "positive" in the fund mentioned. I hope I am not out of line to ask this but did I miss something what would change things in this case:

http://www.boerse-frankfurt.de/en/funds/tri+style+fund+AT0000701164/chart

I don't want a recommendation what I should buy or not - I am just curious why someone would buy into this fund. That would help me understand the topic a bit more.

 

[Bit-Bit]

GAF, how do I buy stocks in Nintendo right now? I see that they're not doing very good especially when compared to 2007 and 2008. So how do I go about buying stocks from Japan?

 

[RumblingRosco]

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[Sanky Panky]

I just had a discussion with someone from my bank encouraging me to invest some money on a monthly base (~100&#8364. Now I got a few recommendations for investment funds. I did some research and compared performance for 1/3/5 years, checked how the money is distributed, calculated some historic values and combinations, etc.

Now I am a beginner and I have to rely on the things the bank clerk tells me. However I don't see the "positive" in the fund mentioned. I hope I am not out of line to ask this but did I miss something what would change things in this case:

http://www.boerse-frankfurt.de/en/funds/tri+style+fund+AT0000701164/chart

I don't want a recommendation what I should buy or not - I am just curious why someone would buy into this fund. That would help me understand the topic a bit more.

You can get really technical while looking at funds, and as Soka accurately said, previous performance is not indicative of future results. One thing that more advance people can do is look at the strategy/style of the fund, so try to see how it will perform in the future based on your own market expectations, and to compare it with others with similar styles.

Here is what some of the mumbo jumbo means, without much more research into the fund:

Benchmark:
50% JPM GBI Global Bench TR USD,
50% MSCI World LCL
This means that with their holdings, they will try to emulate the performance of these indeces. They both are global indeces, so you will have exposure to assets all around the world.

Key Figures
Sharpe Ratio 1.18 This is your risk-adjusted return of the fund (over 1 is good relatively). The higher the better.
Jensens Alpha -5.53 This is the result of the managers deviating from the becnhmarks, via active management. They got beat by the benchmarks pretty good.
Treynor-Ratio 6.00 Like the sharpe ratio, it's the risk-adjusted return in excess of a risk-free return. The higher the better.
Tracking Error 4.26 This means that they are usually way off in tracking the benchmarks, because they use a semi-active strategy of picking assets.
Information Ratio -0.90 This one it depends. It could be the same as the sharpe ratio, but I think it's actually a function of an Info Coefficient (how right they are) times how many decisions they have made. Not good in this case.
Maximum Drawdown -5.00% This is how much % it went down during one period. If you can't stomach that, look elsewhere.
Volatility 6.31 This is the standard deviation of how much the return can swing. It will move +/- 6.31% from the average return 68% of the time (one standard deviation), for example.
Beta 1.19 This means that when the global benchmarks move 1%, your fund will usually move 1.19%. It's like a sensitivity to the market.

 

[systemfehler]

First, if you aren't investing/saving for retirement already, then putting in 100€ (or more) a month is a very smart first step. Whether you choose the above fund or not, I think that's a great practice to make a habit.

I'm... having a really hard time understanding that website. I'll try my best.

Thank you for your effort. The problem is that often funds are only available on local websites - it was hard to find something in english about that certain fund.

First of all; you mentioned looking at past performance (1/3/5 year); past performance, while helpful, is not indicative of future performance. Don't weight it too heavily in your investment decisions.

I just played through a few scenarios - to test what the differenct a one time payment + monthly additions could make depending on the time you start. The fund I mentioned barely returned any money in most cases so I wondered why someone would suggest it.

You've looked at the asset allocation; I cannot comment on that because I do not recognize any of those stocks/holdings... but I'm also in the U.S. and am fairly uninformed as to international investment opportunities.

Since I am not an expert I just tried to think about some problems. For me it was important that the fund is not only using Europe based stock/investment funds but splits between EU-US-Asia and how the distribution between different sectors (energy, health, telecommunication, etc) is

One thing I see you failed to mention having looked over which is perhaps the absolutely most vital factor when considering a mutual fund purchase: The cost to you! This fun has no initial (or purchase) fee; GOOD. It has no redemption fee; GOOD. It has no distribution fee; GOOD. With that said, it has a 1.84% management fee. I'm not -totally- sure what that management fee goes towards and it isn't explicitly stated on that website as far as I found, but I assume it's similar to an "expense ratio"; basically, 1.84% of all the money that goes into the fund is automatically sucked away to pay for the portfolio manager's salary (and other misc fees).

What does that mean to you?

Basically, that fund has to do 1.84% better than the market average just to keep up with the market overall and more than 1.84% better to actually be a better investment. Now, 1.84% isn't the worst expense ratio I've ever seen, but for example, Vanguard.com offers a ton of low-expense funds; hell, the worst on there is 0.92% with most falling as low as 0.20-0.40%. Personally, I would look for better/lower-cost mutual funds to invest into if I were you. Vanguard.com isn't available in Europe as far as I know, and my knowledge of European investment options is lacking, but I would encourage you to look into other places and focus at least partially on a lower expense ratio/fees.

Well right now I am a bit overwhelmed by all the information so I more or less need a bank to handle some of the administration - I doubt I would come far if I opened an account with a online broker and it is difficult to get lower fees because my bank charges more for funds not in their portfolio or under their direct management. I do have the plan to manage more by myself in the near future but right now I guess I have to sacrifice (future) profit for my current situation.

Disclaimer: I only spent about 20 minutes looking into your selection, so please double-check what I've said just in case. Taking financial advice from strangers over the internet at face-value is never a good idea!

I will do that I was just curious and it helps to get the input of others. Otherwise I would be too dependant on my bank account - which after all wants to sell (their) products. My main problem is that conservative strategies don't allow me to suddenly change my saving strategy. I could get a fixed 1.1% for any sum over the next 18 months but I can't add more or withdraw the money until then. With a fund I am more flexible.

So far I regard this as a (longtime) experiment - I will talk again with my bank represantative why that fund was recommended, about all the fees. Can't think of any other questions so far. Thanks again and if I don't end up getting crazy and chicken out I will try to report my newbie experiences in the world of high finance.

You can get really technical while looking at funds, and as Soka accurately said, previous performance is not indicative of future results. One thing that more advance people can do is look at the strategy/style of the fund, so try to see how it will perform in the future based on your own market expectations, and to compare it with others with similar styles.

Here is what some of the mumbo jumbo means, without much more research into the fund:

Benchmark:
50% JPM GBI Global Bench TR USD,
50% MSCI World LCL
This means that with their holdings, they will try to emulate the performance of these indeces. They both are global indeces, so you will have exposure to assets all around the world.

Key Figures
Sharpe Ratio 1.18 This is your risk-adjusted return of the fund (over 1 is good relatively). The higher the better.
Jensens Alpha -5.53 This is the result of the managers deviating from the becnhmarks, via active management. They got beat by the benchmarks pretty good.
Treynor-Ratio 6.00 Like the sharpe ratio, it's the risk-adjusted return in excess of a risk-free return. The higher the better.
Tracking Error 4.26 This means that they are usually way off in tracking the benchmarks, because they use a semi-active strategy of picking assets.
Information Ratio -0.90 This one it depends. It could be the same as the sharpe ratio, but I think it's actually a function of an Info Coefficient (how right they are) times how many decisions they have made. Not good in this case.
Maximum Drawdown -5.00% This is how much % it went down during one period. If you can't stomach that, look elsewhere.
Volatility 6.31 This is the standard deviation of how much the return can swing. It will move +/- 6.31% from the average return 68% of the time (one standard deviation), for example.
Beta 1.19 This means that when the global benchmarks move 1%, your fund will usually move 1.19%. It's like a sensitivity to the market.

Thank you for the good explaination - that certainly helps more than all those technical glossars I have read through. I guess with some intuition and common sense I managed to pick 2 funds a lot "better" than that one at least when it comes to past performance and those key figures you mentioned. Much appreciated.

 

[Piecake]

Well right now I am a bit overwhelmed by all the information so I more or less need a bank to handle some of the administration - I doubt I would come far if I opened an account with a online broker and it is difficult to get lower fees because my bank charges more for funds not in their portfolio or under their direct management. I do have the plan to manage more by myself in the near future but right now I guess I have to sacrifice (future) profit for my current situation.

Fees are a very big deal

Amount invested : $50,000
Annual return : 6.00%
Projected expense ratio is : 1.84%
What if the expense ratio is : 0.10%

Your investment returns over 30 years will be $109,333 more if the actual expense ratio is 1.74 percentage point(s) less than the projected.


Projected expense ratio
Actual expense ratio

1.84% 0.10%

Net market value after Difference
1 year $52,080 $52,950 $870
5 years $61,302 $66,596 $5,294
10 years $75,159 $88,701 $13,542
15 years $92,148 $118,143 $25,995
20 years $112,977 $157,358 $44,381
30 years $169,824 $279,157 $109,333

So youd have 110k more US dollars in 30 years if you found a fund with a .1% expense ratio and they both got the same return. .1% is about the average expense ratio you'll get if you invest in a Huge passively index funds.

I honestly have no idea what is offered in Germany, but I would look for a online broker who offers a SP 500 or Total US stock market passively managed fund with a low expense ratio (less than .3%) and just dump your money into that.

If you can find a world passively managed index fund, thats fine too. Why the US Stock market works though is that it is incredibly diverse. You really can't get that diversity from any other country

Like i said, i honestly have no idea how it works in Germany, but investing with online brokers in America is incredibly simple. I would definitely look into it because you'd be throwing away A LOT of money with that 1.84 management fee

 

[RumblingRosco]

-

 

[systemfehler]

So I finalized the deal today after extensive research. I managed to get a "fund" with less fees attached to it and hope the risk pays off the adjusted rating/growth (with all fees) looks promising and so did the approach - I don't want a fund which heavily invested in gold (that is why the fund mentioned in my first post went down). I regard that as a ~5 year investment and with each month I hopefully learn more about finance. I did not plan to use that as my retirement fund because for that I need more money - more of a "don't waste money under your mattress" approach.

Fun fact is that US citizen are not allowed to buy certain funds and stuff here. I had to sign a sheet that I am not from the US nor have a green card. Something about taxes I guess.

 

[CrankyJay]

Damn, wish I bought SRPT when it dipped back into the 20s...

 

[Ether_Snake]

Any reason why someone would be precious metals ETF like DBP over GLD? GLD has a 0.4% expense ratio, DBP pretty much follows it toe to toe, but has an expense ratio of 0.79%. It's basically the same thing as tracking gold.

 

[Piecake]

Any reason why someone would be precious metals ETF like DBP over GLD? GLD has a 0.4% expense ratio, DBP pretty much follows it toe to toe, but has an expense ratio of 0.79%. It's basically the same thing as tracking gold.

Guess if you want some metal diversity since it invests in silver.

 

[snack]

Anyone here have UNXL in their stock portfolio?

 

[Ether_Snake]

Guess if you want some metal diversity since it invests in silver.

Yeah but when you compare the chart's progression, it's identical to GLD. It's so much invested in gold (80%) it's pretty much the same. The rest is in silver.

Anyway I'm selling off some other precious metal I own tomorrow. I'll transfer to GLD when Goldman is done sinking gold prices It's so easy to know when to invest in gold and when to sell. When the MSM talks about how awesome gold is, sell. When they say it's shit and going to be shit, buy. I'm giving it around a month or two and I buy again.

 

[Piecake]

Yeah but when you compare the chart's progression, it's identical to GLD. It's so much invested in gold (80%) it's pretty much the same. The rest is in silver.

Anyway I'm selling off some other precious metal I own tomorrow. I'll transfer to GLD when Goldman is done sinking gold prices It's so easy to know when to invest in gold and when to sell. When the MSM talks about how awesome gold is, sell. When they say it's shit and going to be shit, buy. I'm giving it around a month or two and I buy again.

Yea, if its that high it really doesnt matter too much

 

[Ether_Snake]

Gold collapse starting now!

It's the bubbles and mania pattern, and the bull trap is over. Heading down now.

Kept some money aside, will buy back when the fear and panic phases are over

 

[Az987]

So I bought some shares of Visa a little after they went public at around $68 a share I believe.

Do you guys think I should hold on to them longer?

 

[Ether_Snake]

So I bought some shares of Visa a little after they went public at around $68 a share I believe.

Do you guys think I should hold on to them longer?

What's your objective? If you don't need the money now, I think you could hold it indefinitely, they're not going anywhere. P/E is high though. I personally would have sold at that point, since I wouldn't hold individual stocks for indefinite returns.