EPTWhy would people ever invest in mutual fund? - Page 2
| Blogs > DarkwindHK |
|
Entropic
Canada2837 Posts
| ||
Chill
Calgary25989 Posts
On December 16 2010 01:17 DarkwindHK wrote: You do not need to know quant to invest. There is also no guarantee that they work anyways. We cannot compare going to see a doctor and buying a mutual fund. Doctor is an expert in that field, and there are empirical proofs that they can help a patient. However, there is no evident showing that wealth managers can do better than any average guy. In fact, fund managers regularly lose to astrologist and 8 year old girls in stock picking experiments. Hmm that's fair and accurate, I never thought about it like that. | ||
|
bonifaceviii
Canada2890 Posts
| ||
|
metaphoR
United States199 Posts
On December 16 2010 01:17 DarkwindHK wrote: You do not need to know quant to invest. There is also no guarantee that they work anyways. We cannot compare going to see a doctor and buying a mutual fund. Doctor is an expert in that field, and there are empirical proofs that they can help a patient. However, there is no evident showing that wealth managers can do better than any average guy. In fact, fund managers regularly lose to astrologist and 8 year old girls in stock picking experiments. do you have any links for this? this is pretty interesting and it reminds me of how the gold fish or whatever it was could pick the fifa world cup winners better than "qualified" people who knew a lot about the teams and stats etc | ||
|
XCLuSive
Canada121 Posts
I mean.. SERIOUSLY, why's it so complicated. So you're saying ETF and S&P500 Index > Mutual Funds? Care to explain how it works, and what makes it different? | ||
|
Glacierz
United States1245 Posts
On December 15 2010 18:11 DarkwindHK wrote: I think picking the right fund and right manager is at least 10 times more difficult than picking a stock. And the fact that "past performance does not indicate future return" just show the futility of this approach. Actually if you worked long enough in the investment industry you will find that the opposite is true, but both are very difficult. Mutual fund "NET OF FEES" tend to underperform the average benchmark, but it will not be fair to average all mutual funds into a single pool. You can always find managers that outperform somewhat consistently over time. If they are truly random, then you expect 50% to outperform and 50% to under perform in year 1, and 25% would have out performed in 2 consecutive years statistically speaking. However, research shows that somewhat over 33% outperforms 2 consecutive years, which means there is value in investing in mutual fund if you are able to pick the right ones. | ||
|
Glacierz
United States1245 Posts
| ||
|
bonifaceviii
Canada2890 Posts
| ||
|
Glacierz
United States1245 Posts
On December 16 2010 02:42 bonifaceviii wrote: All the talent in fund management are in hedge funds. Mutual funds are for risk-averse lay people, which means they have a place, but it's not in performance. Not entirely true, there are mutual funds that employs significant leverage and active management, but you are right about hedge funds. 90% of people who know what they are doing are probably in Hedge Funds | ||
|
azndsh
United States4447 Posts
| ||
|
sooch
Canada299 Posts
On December 15 2010 18:11 DarkwindHK wrote: It is also a mathematical truth that 50% of all investor will perform worse than average. herp derp statistics... I don't see anything wrong with people paying for a service that they don't have time to learn to do themselves...I mean sure you could paint your own garage door but you have to go out and research what paints are good for the material your garage door is made of, whether or not they're weather resistant, get all the supplies you require for painting together (remember, painting isn't a thing you do regularly), and then actually invest the time needed to do the painting. It's much easier to have someone do it for you, even if they might do a job slightly below your standards if you had done the entire thing yourself you've saved yourself a lot of time and headaches. User was warned for this post | ||
|
BrTarolg
United Kingdom3574 Posts
If you're going to invest, learn to do it yourself or have enough money to buy into a hedge fund. For those who are smart enough to play poker and play starcraft, really you should be smart enough to do your own research to learn how to invest - its a lot of fun, its interesting, and if you don't find it interesting then you shouldn't be investing anyway. The fundamentals (reading the ISM when it comes out for eg) are relatively straight forward and understanding basic fundas of a stock (such as what P/E means etc.) is something you can just teach yourself and research on the internet At the very worst, stick all your money in the hang seng and you'll be fine | ||
Ramiel
United States1220 Posts
 the low risk types are very popular becuase most of these types of mutual funds while having a marginal gain, are very safe and at least do increase some small percent quarter to quarter. | ||
|
Insanious
Canada1251 Posts
In Canada, a lot of people put their money into Canada Savings Bonds... but the returns on those are so terrible it makes me sad/ So people want to put their money into something for like 30 years that makes a little more... they want to do 0 work, but want to make some interest since they have money lying around. This is what they are for, there are few things you can throw your money into for 10,20,30 years and make safe money that you have to do 0 work on than mutual funds... most other things you jump from one thing to another when the markets start going south... | ||
|
kzn
United States1218 Posts
On December 16 2010 03:02 sooch wrote: herp derp statistics... I don't see anything wrong with people paying for a service that they don't have time to learn to do themselves...I mean sure you could paint your own garage door but you have to go out and research what paints are good for the material your garage door is made of, whether or not they're weather resistant, get all the supplies you require for painting together (remember, painting isn't a thing you do regularly), and then actually invest the time needed to do the painting. It's much easier to have someone do it for you, even if they might do a job slightly below your standards if you had done the entire thing yourself you've saved yourself a lot of time and headaches. The point is not that pooled investing is a bad idea, the point is that actively managed funds consistently perform worse than market average. There are 3 funds that have outperformed the market over the last 3 decades, and each one owes much of that to one incredibly trade they made rather than a number of good trades. The other funds that outperform are invariably private funds that you cannot get into unless you're working for the right people. If you're just looking to invest in stocks, you would be far better in almost all cases to invest in an index fund, not a mutual fund. | ||
|
gen.Sun
United States539 Posts
http://en.wikipedia.org/wiki/Inner-platform_effect | ||
|
DarkwindHK
Hong Kong343 Posts
On December 16 2010 02:14 XCLuSive wrote: =( For every article/person I read and learn from saying that Mutual Funds are awesome and safe and easy, I come across another article/person that says it's bad. I mean.. SERIOUSLY, why's it so complicated. So you're saying ETF and S&P500 Index > Mutual Funds? Care to explain how it works, and what makes it different? They are not better, but they are CHEAPER in cost. Its the other way around, mutual funds does not necessarily give better return than indexes. However, you know for sure they cost more. Essentially, you are going to pay more for sure to get a chance of getting better return, together with a chance to get disastrous return. | ||
|
DarkwindHK
Hong Kong343 Posts
On December 16 2010 01:46 metaphoR wrote: do you have any links for this? this is pretty interesting and it reminds me of how the gold fish or whatever it was could pick the fifa world cup winners better than "qualified" people who knew a lot about the teams and stats etc No link, but you can find this in TIMES of London, March 2002. Libraries may have it. For the "no evident showing that wealth managers can do better than any average guy"; well... I cann show the "lack of" evident, because they do not exist. You can understand it conceptually instead: A professional gambler (investor) going to a casino to compete with the gambler (investor) from all over the world. Other investors include old ladies, little boy, astrologer, dice thrower, starcraft players....etc However, in this casino, the chance of winning is not known by the gamblers, in fact, the chance of winning is not a constant while the reward is also an unknown. It is in this environment the profession gambler need to compete against other professional gamblers and also...the little girl. Too bad it is not his lucky day, and he got the wrong stock and lose in the casino. No amount of experience in investing will get you prepared for events like 1) Apple Inc release a new product and it doesn't sell/sell very well ; 2) Korean War 2.0. Even if you know for certain iPhone 5 or Starcraft 3 will has exactly 61.257% chance of selling like hot cake and Korean War will happen with a chance of 1.024%, how can you translate that into investment strategy? What if the other 38.743% part and the Korean war 2.0 is what actually happened? (I guess you will not be the star analyst this year!) Addition to that, unexpected events (like earthquake, flood) has much larger effects than expected events. And unexpected events...are really unexpected. (Fund manager are also human, so they did not expect it.) | ||
|
decafchicken
United States20088 Posts
On December 16 2010 00:11 DarkwindHK wrote: I can do those models, I have tried over 100 factors, so I already know which one work best in Hong Kong. Of course you need to update them regularly since one factor will not work forever. Some of the factors that tend to work are: P/E, earning momentum and medium term share price trend. You can try it yourself with excel, its not that hard. Simple does not mean bad. You mean people actually use that shit i learned in my finance class? :D | ||
|
Steveh
United States112 Posts
'The Black Swan' is a great book for anyone who finds this thread's contents interesting someone already accurately pointed out mutual vs hedge fund differences. no need to state it again. some resolutions to the OP's problems are: diversification, money management, max sector risks, max transaction risks, unbiased to either the long or short side, simple and robust systems. these parameters are found more with indifferent hedge fund managerial systems as opposed to buy and hold mutual fund managers. investing means you assume the unknown risks and try your best to ameliorate their loss of equity pain when they arrive. | ||
| ||
