My biggest mistake was wasting precious time investing in mutual funds. Their fees and trading destroy returns, big time. Time is your biggest ally in investments. Use it well!
I have tracked my mutual funds for 30 years doing an IRR function each day and I can tell you, over 5 plus year periods, the returns are absolutely terrible. I have been migrating out of mutual funds for years, just not fast enough.
The game in the mutual fund business is just like the wrap fee business. They shave off their cut of the assets each year. The more assets under management (AUM), the more available to line their pockets. So the game is not to get great returns, it's to “satisfice” their holders enough to keep them onboard. Therefore, they don't go for big wins. They try to get enough so you don’t leave them, so they can get their cut.
Did you ever see the Fisher commercial where they say, "We make money when our clients make money." That is true, but what they don't say is more important. When the customer loses money, Fisher STILL takes their cut. This means losses are exacerbated by the fees they charge when investments turn down. You take the risk, but they take the safe, steady annuity like return. No thanks!
So from here on out my focus is on individual stocks where the returns for the last 30 years have been absolutely beautiful.
For many investors, you could invest in a diversified portfolio of blue chip stocks bought at low prices and P/E's, never have to pay fees again and get the market rate of return. John Bogle always said that the financial industry was taking money from us hand over fist. He was absolutely correct!
Be smart, be well-read, be aware and be successful.
“There are huge advantages for an individual to get into a position where you make a few great investments and just sit back. You're paying less to brokers. You're listening to less nonsense.”
“Modern life creates successful bureaucracy and successful bureaucracy breeds failure and stupidity.”
Charlie Munger
