Understand that the only thing that drives stock prices is supply and demand.  Trying to figure out when that balance will change is virtually impossible for the amateur investor.  

As a former stock broker, I can tell you I never buy individual stocks.  I don’t have access to all the critical information I’d need to make a good decision.  

Also, I found out long ago that buying any investment based on the advice of someone who will make a commission is a mistake.  Even if the “advisor” is honest (good luck with that!) and thinks he’s telling you the truth, someone in his chain of information has lied.  As long as there’s money to be made, someone, somewhere up the line has concealed something or invented something to make the investment more attractive.  There’s always something important that you’re not being told.  

The most financially dangerous phone call you can get is three minutes after your advisor’s manager has told him, “Your production sucks.  If you don’t do another $50,000 this month, you’re fired!”  Or, “Good news!  If you do another $50,000 this month, you’ll qualify for that free trip to Vegas!”  Either way, the advice you get will have only one purpose and your financial wellbeing will not be a factor.  

So what do I do?  I buy only no-load mutual funds and only on the recommendation of someone who won’t make a commission.  Lots of investment newsletters are available, although it’s not easy to find the good ones.  Personally, I like Don Dion’s Fidelity Independent Advisor.  I have no financial interest in the publication, but I’ve made a whole lot of money by buying Dion’s “strong buy” recommendations.  

I currently have 22 Fidelity funds.  Just going down the list, the 2012 yields were:  17.77%, 22.45%, 16.26%, 18.70%, 28.82%, 12.09%, 27.01%, 12.01%, 18.89%, 23.55%, 4.11%, 21.64%, 20.04%, 36.59%, 30.01%, 15.39%, 27.81%, 21.39%, 20.64%, 15.62%, 34.22% and 17.16%.  I have to sell that Latin America fund (4.11%) and go to the Emerging Asia fund.    

FWIW, I only buy funds that are geared toward aggressive growth.  When the market drops, you’ll lose money, but only if you sell. If you stick with it, the market always comes back and you end up ahead; usually way ahead.  You have to take the long view.  Until you’re at least 55, screw “balanced portfolio” investing.  You want growth and lots of it.  I’ve been using this approach for over 40 years.  My wife and I have about a third of our money in investments that are designed to protect the principle, but our IRAs and 401K/403B stuff is all about growth.  We can make $200,000+ in a year and not worry about taxes.  

We’re now in our late 60s.  We’re thoroughly retired.  We own a nice 4 bedroom house on a lake.  It’s paid for.  We have two very good cars that are paid for.  We have no debt.  We travel 1st class and pretty much buy what we want.  I have a big safe full of guns.  

We started working toward this goal when we got married in 1968.  We lived below our means and saved like crazy.  We went 41 years between buying new cars.  We bought 3-4 year old cars (usually Japanese) for cash and drove them for 5-7 years.  Her 2012 Rav4 broke the long chain and we paid cash.  

Anyone can do the same if they’re willing to live without the coolest car on the block, the biggest TV, the newest video game crap and so on.  Pay yourself first.  Pay off your credit cards every month.  If that’s a problem, quit charging stuff on the damn card!  

Good investing!

Amen! Preach it brother.......

20 or 3 years ago this was good advice.

Agree.

Yep.

Kinda tough to do if you don't have the wealth to preserve.

If you want to retire and live reasonably well, you need a minimum of $1,000,000.  This number can be reduced if you have guaranteed income.  If you’re already a millionaire, you can concentrate on preserving wealth.  If you’re like most of the younger people I see, with big car payments, $1,000 - $1,400 rent or mortgage payments, $5,000 - $10,000+ in debt and $500 in the bank, you’re going to struggle all your life and die in the middle of, “Welcome to WalMart!”

Last year, everyone was crying about the crappy economy.  I made $255,000 in tax-deferred investments.

You do it your way and let me know how it works out for you.  

Any advice for a guy starting out?
Im 28, a self employed electrician. Business is good, but im only starting out. Ive zero debt and about 10k euro in savings which are just sitting in a credit union doing nothing for me.

Schmigs,

Since you’re in Ireland, your circumstances might be a bit different, but I suppose the principles are the same.  Savings first, avoid investment advice from anyone who stands to make money if you follow their advice, live below what you could afford if you didn’t care about the future, concentrate on piling up the investments.

Can you invest with a company like Fidelity or Vangard?  Can you set up tax-deferred investment accounts?  I worked for 11 years for a company that would match up to 12% of my salary if I invested in their 401K retirement plan.  Not being a total moron, I was in for the full amount.  Is that sort of thing available in Ireland?

I recommend Dion’s newsletter (see the OP) only because I’ve had such good results with it and haven’t bothered to investigate any others.  

If you have 10k euro, I’d say divide it into roughly 3 piles and go into three funds; FSCHX, FSEAX and FDGFX.  Subscribe to Dion’s newsletter.  

It’s always fun spending euros.  They’re all different sizes and colors.  It’s like spending Monopoly money and getting real stuff.  The last time we went to France and Italy, we got 20,000 euro from our local bank and spent it all.  I left most of the money in the hotel safe and carried some in a zippered pocket on the right leg of my slacks.  I never had a problem except:

My wife and I had just come out of the Uffizi Gallery in Florence, Italy and were walking north into the Piazza della Signoria. Florence is notorious for pickpockets and I was constantly aware of my surroundings.

I was glancing toward my right at a large statue when I saw a hand appear at my right side, just above my belt, right where I always carry an XDm  when I’m at home. I grabbed it in the standard retention move, twisted and turned to find myself holding a mime in a wrist lock.

I never cared for mimes.

Apparently, this guy was playing for the crowd and had intended to tickle me, and maybe my wife, under the short ribs. Instead of getting a laugh, he was down on one knee and in pain. Imagine my sympathy.

I eased off a bit on the pressure and, with my left hand, shook my index finger slowly in his face. The crowd laughed and cheered. I smiled at him, let him go and made a “shoo” gesture with both hands. He backed up a couple of steps and, you have to give him credit, gave me a deep bow.

Then I had to spend the next few minutes explaining to my wife why I’d assaulted a mime.

Good advice. Having said that, I think a guy who travels first class at his leisure could probably afford a team membership for himself. The additional $24 shouldn't bump you to a new tax bracket.
 
 

Thanks for the advice. I think i have a lot of reading to do.

Ha!  Quite true.  Done.

today 99% of the stock market is computers trading against eachother to make fractions of a cent.

You never have to explain why you assault a mime.

Never.

TR

Good man.

 

Tried it with Prudential Securities and First Union in 1998-1999..passed the series 7, 63, 65 but couldn't grow my book of business fast enough and washed out....who I really felt sorry for were the guys who would have inherited all their dad's clients but couldn't pass the 7..

The Series 7 test isn't easy.  Brokers aren't stupid, but many of them are sociopaths.  I knew a couple who would tell their clients any damn thing to get them to buy.  They'd just make stuff up.  

The main reason I got out of the business was, my manager told me I had to push a certain bond that he'd committed the office to buying.  He was in a competition with another manager.  I refused.  We had words and I walked out.  

There were other reasons, most of them having to do with morals.  Brokers were often abandoning their integrity to make their goals.  That’s assuming they had any integrity to begin with.

I wouldn't say most, I would say a fringe percentage of crooks I hope is put out of business soon.

I saw some pretty strange things during my couple of years in the business..My branch manager got a couple of big timers from another firm to jump ship and join our office..So at the end of the day every broker in our office is sitting in jeans and tennis shoes waiting for the phone call.  The new brokers call us and we all run across the street with hand trucks to the other office..We exchange a few harsh words with the other branch manager and his second in command.. pack up the new brokers' stuff and run them back across the street to our office..

...wow...

Good advice.  I'm an index guy myself.

The company I worked for had a couple of dozen offices around the country.  They “made a market” in stocks and bonds, meaning they bought large blocks of securities and offered them to their brokers at an increased commission percentage.  Some brokers would come in every morning and check to see which security had the biggest commission or “chop”.  That’s what they’d sell all day.  It didn’t matter what the security was or whether it was really any good.  They wanted to maximize their commissions and nothing else mattered.  

Brokers are salesmen first.  It’s all about production.  Managers are constantly having contests to see which office can produce the most.  They’re rewarded with expensive merchandise and trips.  Top producing brokers get top-shelf Scotch or other stuff, whatever the managers think will get the most action.  The pressure to produce is just relentless.  

I did a lot of business one quarter with some engineers at a major defense firm (I got hold of their corporate phone book – a gold mine) and was rewarded with a week in the Bahamas.  I mined that book for quite a while and did very well.  

Good stuff. Tagged for ideas and advice.

Do you plan to sell out of those funds and get into VIX based stocks in the coming months?  I don't think anyone will disagree that the implosion of the market is on the horizon and a lot of those funds are going to come crashing down.

When do you have to start taking withdrawals from a 401K.  I know you cant start until 59.5, but when do you "have" to start pulling it out

I'm looking to start making my first investments. Why did you choose Fidelity over Vanguard or any of the other options?

Also curious

So you successfully pick mutual funds despite the fact that on average, mutual funds do way worse than index funds?

If the average joe doesn't have enough information to successfully pick stocks, how can he have enough information to pick mutual funds?

It's possible to successfully trade into / out of mutual funds, and make money, even if the index funds outperform the mutual
funds that you trade.

In other words, it's possible to successfully make 15% while you could have made 20% doing the same with index funds.

As for why mutual funds underperform the overall market, there are a bunch of regulations that essentially tie mutual fund managers hands
concerning trading into / out of any particular asset. IIRC they have to hold anything they buy for over 1 year because their purchasing
power otherwise would allow them to manipulate markets and wreak havoc on a companies share price.

Individual investors do not have this long term only limitation, and are able to easily buy a stock today, and sell it tomorrow. Only intraday trades
have any sort of regulations, and even those are minimal. You would have to buy/sell within the same trading day 4 times in 1 day to be
considered a "day trader" and even then its allowed assuming you meet your brokers minimal capital requirements for doing so.

I hope this helps explain why mutual funds hands are somewhat tied concerning losses. They basically have to eat them for at least a year, where
an individual using otherwise an exact strategy, would be able to dump their losses immediately at their predetermined loss point and get out.

This doesn't make mutual funds a bad investment. It just puts investments in mutual funds into a "lower volatility" category than others. Many people
are willing to trade short term volatility for longer term consistent gains. Especially when it only takes a few minutes a week to manage a position
in a mutual fund.

Any strategy that involves diversification, as a mutual fund does, will provide "average" returns. Because that is exactly what a mutual fund is,
an average of X different positions. An individual investors portfolio of X different positions will return less than the best position as well.

As for "average joes" ... he has no chance making exceptional money doing anything, including trading, if he doesn't have some amount of specialized
knowledge. That said, anyone can learn to trade like an expert, and make exceptional money, if they put in the time and effort and have the proper mindset.
The "average joe" actually has the best regulatory position, as his hands are not tied like large institutions are. Mathematically, the average joe has the edge, so
long as he is educated enough to know what he's doing.

No.


No one knows what the market is going to do.  No one.  


I think it’s 70 or 71.  Not sure.  


Only because I’ve gotten such good advice from Don Dion’s newsletter.  If you can get good guidance (meaning you pay a flat fee for the advice and it works for you) any of the fund families will do.  Just don’t ever buy load funds.  

x1 million

The performance of the “average” mutual fund is irrelevant.  That would only matter if you were stupid enough to buy funds at random.  I don’t do that.


Try reading my previous posts in this thread.  The answer is there, available even to low intelligence.

post some of the funds

I like to look into those and do some research

thanks

In a previous post, I recommended FSCHX, FSEAX and FDGFX.  I'm currently in over two dozen funds.  

I know I'll never be able to do the research needed to make the kind of money I want and I have better things to do than spend most of my time trying.  There are fund managers who are very good and others (most of them) who aren't very good.  I have no wish to do what they do.  I don't have access to the information they have and you probably don't either.    

When I was a broker, I often had clients who wanted to run their own accounts and that was fine with me.  They usually traded a lot and I got paid whether they gained or lost.  They rarely gained.  These days you can trade for much less commission than back then.  If you want to give it a try, go ahead.  Good luck.  

The answer is in Japle's previous posts.  Even a person of low intelligence can divine the answer from his previous posts.  Gosh!  I just hope you aren't stupid enough to buy funds at random!!!



I mean, gee willikers!  Alls you gots ta do is buy aggressive no-load funds recommended by some guru (who doesn't receive a commission... although the newsletter isn't free!) that you like.  




Institutional investors use index funds and a bond/stock % strategy.  There's no reason Joe Blow can't either.  No-load mutual funds still have fees.  TANSTAAFL  What are the expense ratios on those no-load funds that Japle uses Dion recommends (for a flat fee)?

Additionally, how did you pick Dion's Newsletter Japle?  By the recommendation of someone else's newsletter?  

Let me explain something to you, Ducky.  People make decisions differently when it’s their money on the line.  Brokers who make a commission will try to sell you something you don’t need because they have boat payments or have to come up with child support.  If you lose money, it’s no big deal, because they’re always cold-calling to dig up new customers.  They live off commissions, not good advice.  It’s like a car salesman who sells you a POS.  He doesn’t care.  He’s got his commission and another customer will be along pretty soon.

I have no idea how Don Dion does his job and I might not understand even if he told me.  That’s not important.  
What’s important (at least to me) is that he’s almost never wrong on his “strong buy” recommendations.  I’m sure there are others who are just as good.  I wouldn’t mind knowing who they are.  
The other very important thing is, Dion doesn’t care what I invest in.  He only cares about giving good advice, because if he doesn’t, he’s out of business.  

Hey, you do what you want.  I’m not telling you what to do, just what’s worked – and worked well – for me.  

I'm not saying it hasn't worked.  How long has it worked for you?  Since early 2009?  Well that's easy, everything went up since early 2009.  Starting from the bottom of the crash, the DJIA, the S&P 500, and the NASDAQ composite all went up 100% or more.

Blue: Not true.  Dion cares about you to buying his newsletter.  He's not some altruistic guy forgoing the material life to provide fund info to his customers at below cost...  Or did you find out that he is that guy through research?  True, if Dion gave absolutely terrible advice, he shouldn't have any clients.  But if he gives OK advice that ends up working well for some people, those people will advertise his product for him thus expanding his client base even though he is likely losing the investors that did poorly.

Red: You just said you don't even know how Dion picks his funds...  so did you pick him randomly?

I totally agree with you that brokers are like life insurance salesmen that live and die by the commission.  But newsletter salesmen are similar and they make money by how many clients they have.  Fund managers make money that way too.  They don't get paid for success, they get paid for how much money is in the fund. Advertising, advertising, advertising.  I wouldn't be surprised if a lot of the larger newsletter publishers got kickbacks from the managers of the fund families they recommended.

The simple fact is that unless you have the market's number (or you have time to do the research to beat the market), the safest (and most reliably best) long term strategy is an index stock/bond % strategy since those two types of investments tend to be opposite each other.

There are two kinds of people in the realm of predicting the stock market:

1.) Those that don't know the direction of the market
2.) Those that don't know that they don't know the direction of the market

Ducky, you crack me up.  


Where did the “early 2009” thing come from?  Did you just pull that out of your rear?  


And I didn’t say he was.  Where did you come up with that idea?  Did you just pull that out of your rear, too?  


You’re assuming that some of the investors did poorly.  

I’m sure that some of them bought funds that were recommended and then didn’t bother to read subsequent recommendations.  They left their money in funds that Dion eventually ranked as “sell” when the fund manager was replaced or retired or died and the new manager wasn’t as good.  Those people are idiots.  If you don’t keep up with the current situation, you’re going to lose.  No surprise there.  

Then there are the investors who panic and sell when the market drops.  The market always drops and, to date, it always comes back.  Those people are idiots.

Dion has 40,000 subscribers to the publication I cited and over 100,000 to all his publications.  Some of those people are bound to be idiots.

So what?