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Top Funds Performance

Comment posted to “The Top Mutual Funds Over Five Years: Credit the Bull and the Calendar,” by Charles Rotblut, CFA, in the March 2014 AAII Journal.
 
Several good points in this article may suggest the need for a new short-term performance metric. What do you think about publishing the average of the five-year performance and the six-year performance? This mutes the effect of a sudden drop in return that may actually reward funds that did an exceptionally bad job in the year prior to the five-year period. It may also provide a more relevant metric than the 10-year average return.
— Fred Evans from Ohio
 

Lessons From Keynes’ Investing Style

Comments posted to “John Maynard Keynes as an Investor: Timeless Lessons and Principles,” by John Wasik, in the March 2014 AAII Journal.

Even after 1928, it does not sound like Keynes was a passive investor, from the perspective that he selected the companies he bought based on a specific set of criteria. That’s quite different from buying an index fund.
— Neil Hoffmann from Pennsylvania

Although AAII gives the same advice elsewhere, “Keynes’ 10 Keys to Wealth” hit the spot, particularly the 10th item.
—G. Muren from Connecticut 
 

Missing Parameters in “What Works” Screen

Comment posted to “Finding Value and Financial Strength Based on ‘What Works on Wall Street,’” by John Bajkowski, in the March 2014 AAII Journal.

I am surprised at the selection criteria. I have the fourth edition of “What Works on Wall Street.” The AAII article does not have price-to-book-value parameter, which the book does have. Did the developers miss it? It can’t be deliberate.

But the most important elimination is momentum. After all, all the value parameters are sometimes low because they deserve to be low—because of poor fundamentals. Precisely for that reason, value and momentum factors are combined. I quote page 583 of the book: “By marrying the two and buying the 25 stocks from decile 1 of Value Factor Two with the best six-month price appreciation, average annual returns jump to an eye-popping 21.19 percent, turning $10,000 into $69,098,587 between 1964 and 2009.”  
—Madhu Kapadia from New Jersey

Pure ETF Model Portfolio

Comment posted to “Model Fund Portfolio: Replacing a Closed Fund,” by James B. Cloonan, in the March 2014 AAII Journal.

Is the pure ETF portfolio reviewed and changes made if needed, just as the mutual fund portfolio is?
—Bill Dooley from Louisiana

Charles Rotblut responds:
Yes. The Pure ETF Alternative portfolio is a subset of the Model Fund Portfolio, and Jim Cloonan will make changes to it as warranted.
 
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Restrict Bid and Ask Prices

Comment posted to “Panel Advises Against Mandated Spreads for Small-Cap Stocks,” by AAII staff, in the March 2014 AAII Journal.

I would like to see bid prices and ask prices restricted to $0.01 increments. It is not unusual to place a limit order—let’s say a buy order at $10.00—and not have the order filled because someone else placed a buy order at $10.0001 and got the trade. This clearly works against the retail investor.
—Paul Weiss from South Carolina

Rolling Over a 401(k) to an IRA

Comment posted to “Considerations When Rolling Over a 401(k) to an IRA,” by AAII staff, in the March 2014 AAII Journal.

Two additional points:  Your 401(k) may give you access to institutional funds with extremely low expenses that would not be available in an IRA. Also, some 401(k) plans allow a partial rollover, which means that you can keep some of your funds in the plan to take advantage of lower expenses while rolling over the balance for more flexiblility in IRA options.
—Joseph Velson from Illinois

 


Discussion

Ashok Choksi from CA posted 4 months ago:

I came across a prediction by a highly reputed analyst, in the sense that his previous predictions have proved to be very accurate in terms of their timing and substance, that the stock market is headed for a bigger recession than that of 2008. Stock prices, according to him, will drop by 40 per cent from their current levels within the next six months.

Do such predictions pass under your radar?

Sincerely,

Ashok Choksi


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