Investment & Financial Articles
Title: No Load Mutual Funds: Investment Hype vs. Investment Help
Author: Ulli G. Niemann
Article:
With the internet such a huge part of our daily lives, many
investors have access to a wide range of instant investment
information.
Whether you're into stocks, bonds, mutual funds, futures or
options, there are tons of electronic investment newsletters
offering to turn your small stake into a giant fortune. All you
need to do is subscribe and watch your portfolio soar.
Yeah, right!
As a practicing investment advisor specializing in no load
mutual funds, I have received my share of e-mails from
disillusioned subscribers wanting to know how to better evaluate
newsletter services.
While there are no absolutes, I can give you a few pointers that
might help you make a better decision:
1. Stay away from the most obvious hype. Ads promising to turn
your $10,000 into $1 million in 2 years by buying this
incredible stock or hot commodity are not promoting investing -
they are selling gambling. Follow the "If it sounds too good to
be true, it usually is" rule.
2. Most mutual fund newsletters won't make those outlandish
claims, but some of them are still pushing the truth as far as
they can. So try to get a free issue or two to examine. If you
can't get a sample, check if they have a trial period? How about
a money back guarantee? If not, pay with your credit card. These
days you're pretty well protected by this payment method even if
the newsletter doesn't offer a satisfaction guarantee.
3. Consider the editor as well as the disclaimer notes. Is he or
she only publishing a newsletter? Or is he also an investment
advisor with a practice?
Why would that last point matter? I may be biased, but I believe
that you get far better advice from a writer who also is in the
trenches every day investing their own as well as their clients'
portfolios. They would have far better insights as to what works
and what doesn't than someone who has the theory down but no
practical experience.
4. Look at the investment recommendations. Are they suggesting
you buy into a certain orientation such as mid cap, small cap or
large value? Or are they picking specific investments based on a
variety of technical indicators?
In my no-load mutual fund practice I use specific
recommendations, even for my free newsletter subscribers. They
are first based on my trend tracking indicator giving us the
green light and secondarily on the selection of mutual funds
based on momentum analysis.
The more specific the recommendations, the better, because that
allows you to follow along either just on paper (which you
should do at first) or with your actual portfolio.
5. Are they recommending when to sell a mutual fund either
because of gains or to limit your losses? This to me is the most
important issue. If there is no plan in place for getting out,
how will you ever know when to sell? This has been the greatest
downfall of most publishers (and investors!) since the bear
market of 2000 - not selling even if market conditions dictate
it would be in your best interest to do so.
The advice of most newsletter services can make you money in
bull markets. However, with the continuation of the bear market
still a distinct possibility; be sure to look at any
newsletter's investment advice record since 2000.
For many people investing is an emotional issue. The pendulum
swings between fear of loss and greed for greater returns. If a
complete methodology for buying and selling is offered in a
newsletter, such as one I advocate, be sure that it fits your
emotional make up.
There is no sense in following an investment approach, which may
have merits, if it means sleepless nights for you. You won't
stick with it for the long term - and long-term investing is
essential for making your portfolio grow and prosper.
So, the bottom line is to look for a newsletter that: . does not
promise the moon, . has a track record through up and down
markets, and . recommends an approach that not only is
compatible for your investment style but also has an exit
strategy so you can capitalize on your gains -- in the bank, not
only on paper.
Following these guidelines may not make you rich, but it will
help you avoid some bad advice.
About the author:
Ulli Niemann is an investment advisor and has written about
methodical approaches to investing for over 10 years. He avoided
the bear market of 2000 and has helped countless people make
better investment decisions. Subscribe to his free newsletter:
www.successful-investment.com
|