Here is our end-of-a-rocky-week collection of interesting reads on investing and personal finance. Enjoy!
We've just updated SMI's Personal Portfolio Tracker and our monthly Fund Performance Rankings to reflect mutual-fund performance data through Sept. 30, 2018.
- The Portfolio Tracker is our most popular web tool. It enables you to take the full universe of 20,000+ mutual funds we track and easily transform that data into a concise report covering only the specific funds available via your 401(k), 403(b), or other retirement plan(s).
Using the Tracker, you can personalize SMI's mutual-fund rankings to your specific situation.
- The Fund Performance Rankings (FPR) report is a PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load funds and ETFs. The funds included have been selected on the basis of asset size, brand familiarity, and brokerage availability.
Check page 2 of the FPR report to learn how to use it. On page 3, there is an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.
[This post has been updated with newly discovered information about low-cost MMF options at TD Ameritrade. See section below marked "UPDATE."]
Upgrading 2.0, unveiled in our January issue, added a risk-management function to our established stock-fund Upgrading strategy. When there's an increased risk of significant pullbacks, we'll call for moving to "cash" positions rather than staying fully invested in stock mutual funds.
Money Roundup: 3 Financial Benefits of Working a Few More Years, Why Some Very Smart Investors Went Bankrupt, and More
Here's our weekly Roundup (posted a day early this week to make way for tomorrow's end-of-month updates for the DAA and Sector Rotation strategies):
In autumn, many of us enjoy watching the falling leaves. Mutual-fund investors, meanwhile, are enjoying falling fees. Although the fund industry’s “race to the bottom” probably isn’t over (more prices may yet drop), two brokerage firms — the Vanguard Group and Fidelity Investments — have now made it all the way to zero.
Actress Dawn Wells, homespun Mary Ann on the 1960’s sitcom Gilligan’s Island, lost a lot of money in the 2008 financial crisis — a setback compounded this year when she broke her knee in an accident and underwent an expensive surgery. The resulting medical bills left the 79-year-old actress financially strapped. Fortunately, fans rallied to her aid with an online campaign that raised money to pay her medical debt.
A major medical expense can occur without warning, even straining the financial resources of people who don’t already have money troubles — and few of us can rely on a fanbase to help us out. Consider the case of Crystal Roberts, who in 2015 was transported to a hospital in Texas for three hours of lab tests and x-rays following a minor car accident. Because she was uninsured, the hospital charged Crystal full price: $11,037.35. (She sued, arguing that the charges were unreasonable — and won.)
According to a 2016 study from the Kaiser Family Foundation, medical debt is an equal-opportunity destroyer, hitting not only the uninsured but the insured as well. It also affects people across the financial spectrum, from low-income to upper-income.
Sighting: The Case for Actively Managed Funds
In the United States, assets have shifted away from actively managed funds and towards passively managed index funds and ETFs; specifically, less than 8% of the assets in equity funds were passively managed in 1997, but over 40% were passively managed in 2017.... The conventional wisdom [is that active management does not create value for investors]. That wisdom is based on [research showing] that: (1) The average fund underperforms after fees. (2) The performance of the best funds does not persist. (3) Some fund managers are skilled, but few have skill in excess of costs....
Taken as a whole, our review of current academic literature suggests that the conventional wisdom is too negative on the value of active management. [Multiple studies suggest] that active managers have a variety of skills and tend to make value-added decisions, such that, after accounting for all costs, many actively managed funds appear to generate positive value for investors. While the debate between active and passive is not settled and many research challenges remain, we conclude that the current academic literature finds active management more promising for investors than the conventional wisdom claims.
— From “Challenging the Conventional Wisdom on Active Management: A Review of the Past 20 Years of Academic Literature on Actively Managed Mutual Funds,” by researchers K.J. Martijn Cremers, Jon A. Fulkerson, and Timothy B. Riley. Read the Entire Article
Your own behavior may well be the most important factor in your investment success.
SMI executive editor Mark Biller explained why yesterday on Moody Radio's MoneyWise Live with Rob West and Steve Moore.
Mark also took caller questions, including one about whether investing is too much like gambling.
Here's a thought experiment: How would you invest a tax-free $10,000 gift? Put the money in savings? In the stock market? Pay off debt?
Market-research firm OnePoll put the $10,000 question (plus other related queries) to 1,000 people on behalf of the loan-marketing website LendEDU.
Here is how the main question was phrased:
If you were given $10,000 tax-free and had the ability to invest all of it in one of the following options, which would you choose?
Here's our weekly roundup of financial news and comment. Enjoy!