Just A Thought On What I Think About Investing
I believe there is now a professional, well-trained elite
, supported by large institutions, that is adept and willing to use corrupt practices to accumulate wealth. Despite assurances from game-theorists and anthropologists that the criminal cadre in the species remains a constant percentage over time.
I believe today's mainstream, sanitized, and institutionally sanctioned financial crime rackets are being run by a new breed of crook. There have always been scandals and crooks in the history of American money, but our predator class is a distinct creation of the late 20th century.
Coveting the vast instant riches of the techno-boomers and baby billionaires was way more than many titans of less glamorous industries could bear and in virtually all companies executive salaries soared beyond all proportions of the post-war era. And in many of those executive suites, greed morphed into felony -- Tyco, Enron, Rite-Aid, Adelphia, Global Crossing, WorldCom, ImClone, Lucent, KMart, MicroStrategy, Qwest Communications. And then scandals at the supposed auditors, like Arthur Andersen, insulted the injury.
So now we'll be told that the market, smarter than any deliberately organized system, will correct this. After all, who would invest in a known corrupt game? No one, so the market will make fix it. Plus, the regulators are on the case.
The slow down down of buying mutual funds is exaggerated. Funds have grown and adapted over their 80-year history and continue to meet investors' needs for diversification and professional management. Better tools to analyze and select funds mean CPA/financial planners can make better use of them in client portfolios.
CPA/Financial Planners have a variety of analytical tools they can use to make mutual fund recommendations. These include software, Internet databases and other online research tools that make it easier to compare and contrast funds, determine risk and provide in-depth information on a prospective purchase.
"The new after tax reporting is a much more effective way to allocate assets," says Carl Kunhardt, CFP of Quest Capital Management in Dallas. "There's been too much public misinformation, and individual investors have been led to buy the highest performing funds but ended up with less return than a more conservative fund after taxes."
Exchange-traded funds answer some tax and fee problems as well. With ETFs, investors don't realize gains until they sell their shares. Fees for the indexed versions are now averaging under 20 basis points compared with 100 basis points on traditional open-ended funds.
Before you can plan a mutual fund strategy, you need to have a clear picture in your mind of your goals as an investor. You also need to determine the amount of time you have to reach those goals. Investing is time-sensitive, so you will always need to factor time into any investing strategy.
Generally, having five to eight funds in your fund portfolio should meet your investing needs. The key to your strategy is figuring out your timeframe, risk level and asset allocation first before looking at fund categories and finally plugging in the actual funds.
by: Arthur McCain
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