THe problem with mutual funds is that the turnover ratio is just too high! the comision fees, and the taxes they pay because of that makes them a investment that is secure but very low return... you both should read the same book, the warren buffet way. I am sure you both agree the best way to invest is to buy and keep... keep long enought so that your investment grows as the Company you invested grows as well...

 

No, I won't agree with that. The statement is far too broad for something as complicated as investing. Depending on a person's ROI goals and willingness to risk capital, there are lots of ways to invest. Someone who makes $40,000/yr and has a 401(k) account should probably be in mutual funds, particularly if they are supporting a family. Low risk, long-term growth is ideal for a person like that.

Investing in a pharmecutical fund, for example, is probably a smart move right now. Investing in a single pharmecutical stock, however, is pretty risky. One FDA trial goes south and the stock plummets.

 

:no:

 

:werd:

I'm not going to agree with that.

 

Well i never said that investing in 1 sotck only would be a good either! I am saying that if you invest in 10-15 different stock then you would limit your risk. but hey you do it your way, but i dont think that you'll be able call yourself the second riches guy(neither will I) in the world anytime soon.. now on the other hand my way (which is nothing new) is a simple phylosophy, as Warren Buffet... now dont get me wrong i dont blindly invest like the book says and i didnt learn my way of investing from the book, but you must know that the people who invested with warren and the same way are now some of the most succesfull investor, over and over... not just luck!

 

What exactly do you think a mutual fund is?

Buffet is a smart guy and I admire him, but his is not the only strategy that works.

 

Mutual fund have A LOT more then just 15 stocks... Which is kind of diluting the investment...Specially if you go with something like a Pharmaceutical Mutual Fund, because usually if one company goes up in that industry another will go down (in the long term not relevant in day trading)

Yes your right but it is the most successful and even YOU cant deny that... the school of Buffet(by the way he didn't actually invent that strategy) gave birth to many many millionaires, and it is quite consistent!

 

I never said 15. That was your number.

One of the reasons a person might want to invest in a mutual fund is, if they only have a few thousand dollars to invest, they cannot afford to purchase stock in all of the corporations held by the fund. Its precisely the same strategy as buying many corporations, only it costs far less to do it.


How do you know its the most successful? And whats with the attitude?

 

But that is my point! the strategy is not MANY corparation its a small amount of them... the strategy is called focus investing, 15 stock means you can keep track of them easily and keep up to date!


Well the fact that hes is the second richest guy in US is kind of self explainatory...specially since he mostly made his money from equity investing. Berkshire hataway being his company and the highest quoted stock on the market also proves something! And no attitude? well not willingly giving attitude....But you should take 1 hour of your time and read both his books... after reading that you'll have a new perspective on investing wether you follow it or not doesnt matter... but it might show you an other facet of investing!

 

I must not be explaining this very well. Let me put it another way:

Lets say an individual wants to buy stock in 15 companies with an average price of $15/share. They'll buy a minimum of 100 shares in order to avoid the extra fees associated with buying an odd lot. 15 * 15 * 100 = $22,500 plus fees. As I said before, an investor with only a few thousand dollars to invest cannot afford it.

Moreover, its easier to keep track of a single mutual fund than it is to track 15 separate stocks. I'm not even taking into account the possiblity of stock splits or tracking stocks or spinoffs or any of a number of variables that complicate stock ownership and make it more expensive.

The fact that he is uber-wealthy doesn't necessarily mean that it all came from his investing talent. He's been drawing a salary and bonuses for most of his adult life.

I absolutely agree that Buffet is a shrewd investor. I can't possibly take seriously the idea that I can become his equal after spending an hour reading his books. His expertise represents a lifetime of trial and error and education.