Comments on: a question about mutual funds?

By: es

es — Sat, 13 Mar 2010 22:58:00 +0000

Before you invest in a mutual fund, you are supposed to read the prospectus. Then, you are supposed to ask questions if there are parts you don’t understand.

Since mutual funds are made up of stocks, bonds, and sometimes other investments, there is always the risk of loss. You didn’t read anything to prepare for the possibility of risk and loss. There are warnings all over the prospectus, and on all the marketing materials.

Don’t sell now. Things will change. Mutual funds are very long term investments. expect to stay in the fund for a decade or more. To be successful, you need to stay in a long time, and understand that markets contract and expand.

By: Derek

Derek — Sat, 13 Mar 2010 22:58:00 +0000

Mutual funds hold traditional stocks. I think you mean you have less risk with mutual funds.

Yes, you can lose value in mutual funds just like individual stock.

By: Giggly Giraffe

Giggly Giraffe — Sat, 13 Mar 2010 22:58:00 +0000

Mutual funds invest in stock, and bonds. They have "Objectives" which tell you how their investing stratagy is; how risky they are. You can loose what you invest in … but never more.

"Relatetivly" speaking everyone lost 46% … and so, there isn’t a transfer of wealth, but rather, something similar to a reverse stock split. Everyone has about the same wealth … it’s just that the numbers are different than what we saw 1 year ago.

Major difference will be that credit will be difficult to get even for those who are good with money. Making cash a necessidy when you want stuff like cars, weddings, education.

By: Joe P

Joe P — Sat, 13 Mar 2010 22:58:00 +0000

Mutual funds provide diversification and management but they are not immune to market drops. Some are aggressively managed, some conservatively and some are just plain poorly managed. Even though you don’t state how much time was involved, it sounds like your funds have done worse than the market. If you are using an adviser, consider changing advisers. If you are going it on your own. it is time to consider an adviser. Hopefully your funds had a big up move today. Aggressive funds go down more and up more than the market. The market was up about 11% today. Your funds should have been up more than that based on their recent track record of magnifying the down side.

By: jeff410

jeff410 — Sat, 13 Mar 2010 22:58:00 +0000

That percentage is not uncommon with equity mutual funds right now. If you have a long time horizon, ten years, I wouldnt worry about it and keep dollar cost averaging. You might want to rebalance your portfolio with more bond and fixed income funds. Many bond funds have dropped much less. Equity funds are going to go down when the market goes down. And when people panic and redeem shares that can maks the fund returns worse.

By: picador

picador — Sat, 13 Mar 2010 22:58:00 +0000

Mutual Funds are essentially a matter of not putting all of ones eggs in one basket. But it is "safe" only in relation to picking targeted stocks yourself, they are still stocks and therefor subject to the vicissitudes of the market.
As to your state of mind, it is one thing if you are measuring your paper losses against the price you went in at. That’s real. But if you are comparing to the value of your portfolio as it was a month or so ago, that’s illusory. It was worth that much if, and only if, you had sold out at that time.
If I were you, I’d hang in if you trust your Fund Manager. Perhaps the surge today was essentially emotional; but so was the melt down.
They say that every cloud has a silver lining. Perhaps the silver cloud here is that the investment community
will retreat from its Casino mentality and revert to the practise of taking well-researched and calculated risks.