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Author: EightTrack1 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 263  
Subject: Re: the SEC & ICI solution Date: 11/5/2003 2:11 PM
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I too wonder; "should I grab what's left of my IRA $ and run... -or- IF I do run, will that leave me out in the cold and NOT part of the settlement $$, which is sure to come?"

If you remember; AG; Eliot Spitzer, NY stated: The remedy for these suits is going to be "substantial" and BIG, and it will hurt, which it SHOULD hurt!" (or something to that effect)


I think we're going round in circle, so I'll post this and invite you to respond with a closing statement (sooner or later, we have to get on with our normal life, right?)

Part of our differences are due to the fact that you are a Janus fund shareholder and I am a prospective Janus stock (NYSE:JNS) holder.

I don't know what Janus fund you invested in, your reasons for investing, and your expectations for its performance (reasonable or not). I don't know how much research you did before you invested, your timing (did you buy because of great 12 month trailing numbers?) or what other invesments you considered.

However, given past class action lawsuits against stocks, you will probably not give up any legal rights by switching to a new fund. Usually, the language is "if you owned XXX between 1/1/00 and 10/15/03 you can join ..." our class action lawsuit.

I'm sure the lawyers will be paid well (the flip side of Spitzer's pain) and Janus shareholders will receive a substantial certificate for "reduced future fund expenses" or perhaps a $2.34 check, which may cover a medium buttered popcorn at a movie theater.

Personally, I invest the majority of my own funds in stocks. I watch them closely, like a good parent with a small child in a playground. I own some monies in Vanguard too. There is no better fund family than Vanguard in my opinion. Longleaf also offers good funds; I suggest you read their quarterly letter. It's quite straight-forward. These people will not rip you off.

As a stock investor, I look at today's action in Alliance Capital (AC) as interesting. The stock is down 7%, because of an expanded probe into its mutual fund and hedge fund operations. 7% of Alliance Capital's market cap (don't use Yahoo! Finance numbers, it's misleading in this case) is a huge dollar figure.

Let me share with you how I look at these "substantial fines". Frankly, I couldn't give two hoots about what analysts write. Again, using AC as an example:

250 million shares x $2.59 drop = $647.5 (just today). It has suffered in the past few weeks too. It's hard to believe that the "substantial fine" for AC will be even close to that number. The company also has over $150 million in cash. Shareholder inflows patters are the same as before; weak in retail fund and strong in private client management. I don't expect substantial changes. Changes in the stock market are going to make a larger short-term impression anyway in assets under management.

AC may have already taken too large of a hit for this matter.

****

Back to the scandal itself: Yes, it's terrible. If you lost confidence in Janus, you should leave. As a fund investor, there is no upside to staying with dishonest people, especially when honesty is cheaper and better - at Vanguard. You're not a court of law, you don't have to give anyone the benefit of the doubt.

ET
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