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Author: sheople2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75611  
Subject: Is my money in the wrong place? Date: 12/15/2007 10:36 PM
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I've heard my relatives bragging of their investments yielding high returns in the stock market via mutual funds for last year as well as this year. Most of my money is in Vanguard's Total Stock Market Index Fund which has only yielded about 5% year-to-date. Is my money in the wrong place? I realize that I'm holding for the long term, but I don't understand how so many stocks can be up and yet the index does not seem to reflect that. I posted a breakdown of my portfolio in one of my other two posts on this board, if someone needs to refer to it. Thanks.
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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60417 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/15/2007 11:40 PM
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I don't own Total Stock Market but do own Index 500, which has performed even worse. In the case of Index 500 I believe it's largely due to financials being about 20% of the index. With TSM you also have mid and small cap stocks that have underperformed the Dow and NASDAQ this year.

As you say, you're in it for the long haul. Don't let one year discourage you. Over the past several years TSM has performed well and it will again. My feeling is financials will get their act together in the first half of '08, have a very strong 4th qtr and continue to outperform in '09.

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Author: mrparrotfez Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60419 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/16/2007 12:29 AM
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A lot of stocks in that index have taken a hosing this year. That is the tradeoff in buying an index fund. There will also be years when their stuff goes down more than yours, too.

Even so, it's probably a great place for your funds long-term unless you want to learn to pick out your own mutual funds (or even your own stocks). Yours is a fire-and-forget pick. Sometimes it will outperform and sometimes not. It's just a question of how much risk and volatility you're willing to tolerate, and that's a very individual decision.

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60420 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/16/2007 12:48 AM
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Relatives bragging about their stocks, is sort of like them bragging about their kids. You are only hearing about the highlights in a highly edited version.

I didn’t check you other posts to see what else you have, but eventually it would be good to have maybe 20 to 30 % of your stock holdings in an international index fund for more diversification.

Over the long term the index funds will do better than most strategies, but you will rarely get to brag about it at parties.

Greg

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60421 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/16/2007 6:43 AM
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I didn’t check you other posts to see what else you have, but eventually it would be good to have maybe 20 to 30 % of your stock holdings in an international index fund for more diversification.

I agree with Watty. A good, long Vanguard Retirement Fund might be a more diversified way to plan for your future.

Then tell the relatives YOUR advisor's picks has been shown to beat 85% of all others over the long-term and at least one of his picks makes the WSJ best fund picks almost every week in every market. Then ask them to compare costs. :)

I've solved that problem with relatives, and people rarely ask me back to parties.

Hockeypop

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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60423 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/16/2007 1:50 PM
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It is not at all difficult to find funds that have beaten the indices. Then, if you buy such funds, you need to monitor their performance and sell if they begin to lag.

For this year, emerging markets, as measured by EEE, are up 31%, while U. S. small caps are down over 3%, as measured by IWM. SPY is up 5.5%, QQQQ up 18%, and EFA is up 9%. So the indices have performed rather differently from each other.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60425 of 75611
Subject: Re: Is my money in the wrong place? Date: 12/16/2007 2:38 PM
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Yes, finding funds or even individual stocks that have beaten the indexes is not difficult. The hard part is identifying the ones that will continue to do well in the coming quarter or year.

Managed funds that consistently beat the averages probably are worth what you pay for them. Any fund, any investment can have a good quarter or a good year. But few put them together back to back.

If the performance of your basic investments seem to have lagged, it is probably a good idea to go looking for better performance. But go slow. Select carefully. And if you do well at it, then do more.

The index funds tend to be conservative investments. They do quite well, but individual investments and good stock pickers can usually do better. But finding those when you need them can be tricky. I don't think there is a magical formula. You have to be willing to work at it.

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