Mutual funds suck, but a good stock pick is...

[Tylex]

>>the mutual fund portion must outperform the index fund portion. and since over 75% of the mutual funds out there will not beat the index funds, then this statement will be true less than 25% of the time<<

Ok...but even if I 'give you that'..the 75% stuff, and my managed fund beats the index by say a return of +5%, for example, 25% of the time, I can afford to have a 'draw' or even a couple percent-point deficit for several years(maybe even the 3-out-of-4 yrs. that you come out ahead, as you say) and still be on top, with a good performing managed fund, that beats the index by 5+%!!--Having BOTH, puts you in the position to possibly beat the Index/Market--or with Index Funds only, you resolve to taking market-return *less* your meager expenses, which anyway you slice it, is less than market returns---I think I like the idea of bumping the odds and topping the market, long term...And I will...

If I had bookooo bucks to invest, this wouldn't be the case--market returns would be fine with indexing(or 'bonds' for that matter!)----Like most, I need more total-return than that, with what I have, and add to my investments--and herein lies the difference as to why I add managed funds, to accumulate more for retirement.

As you've heard predicted lately(what do 'they' know, right?) *market returns* aren't gonna be what they've been the last 10yrs.,going forward--but I guess you can live with that...I'cant...

[SARGE]

Beaucoup. None of us will be what we've been past 10 years. In some cases, that's good. The market is sport and amusement for some, an addiction for others, but mostly a gamble. Different strokes for different folks.

[troysvihl]

i don't know the statistics of how many mutual funds consistently outperform the indexes by 5%, but I would assume that it's a pretty damn small number considering how steep the curve is to even get a positive return with a mutual fund yet alone beat the indexes at all.

if you had bookoo bucks, you wouldn't have to worry about risk at all and could invest based just on a straight net present value analysis. then all this talk of past returns becomes moot and your only interested in projected returns. that's why rich people can usually get a much better return than people who just invest in financial markets. They don't have to worry if their investment tanks since they have tons of discretionary income, therefore, they can go for the juicier plums. The person with the bookoo bucks is going to take as many of the higher risk investments as he can rather than many of the smaller risk ones, b/c thanks to the law of averages, he's going to come out ahead even though he looses his shirt three times out of four. (notice the law of averages creeping in again. that's the same law that enables some mutual funds to beat the indexes)

[SARGE]

Yep, and when I'm forking over $500 a month to invest, I take the better odds. Thinking of just putting it all into a guaranteed interest fund. Cheaper returns, but no gamble.

[LawyerRon]

And the Lawyer said "AMEN".

[SARGE]