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No. of Recommendations: 8
IMHO, you should run screaming away from Mr. William E. Donoghue.

His logic is faulty, full of garbage about short term results indicating you should dump index funds and be an active trader or part of an active trader's fund. Buying into a sector simply because it is hot and short selling another because it is cold, and using leverage, are high risk approaches to investing. Chasing fads, IMHO, is a particularly bad approach to investing.

Taking pot shots at Vanguard "destroying wealth" is cheap, low down and dirty IMHO. Vanguard led the way with low cost index funds, a huge benefit to the small investor in my book. I think using a dollar cost approach when buying into the Vanguard total U.S. stock market index is an outstanding and easy way to achieve solid returns over time. We started investing in 1987 and have stuck to this approach of using d/c/a into index funds sucessully. Last month, I tried to estimate a return for an IRA concentrated in index funds after adjusting for additional principal over time. I came up with a CAGR over 12% from 1992-2003.

On simplifying your portfolio, moving everything to one brokerage will help. After this, make a nice pie chart and table listing all investments as a percentage of your porfolio. This is easy and critically important. I posted our most recent portfolio breakdown on this board recently FWIW. Tracking this breakdown over time is critically important to a disciplined investment approach. We have had success limiting portfolio shifts to a twice-a-year schedule, with automatic investments being made twice-a-month in between.


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