The small investor is jumping on the wrong bandwagon at the wrong time:
I don't need to go into the disadvantages of actively managed mutual funds here. Consider John Bogle's arguments against active management if you need reasons to know why mutual funds are a worse deal than index funds and ETFs. I also take issue with the article's assertion that high-quality corporate bonds (rated of course by the same credit rating agencies that completely misread MBS risk) are a "safe investment" in an era when public and private sector debt is over 300% of this country's GDP. Oh well. Some people are going to learn the hard way, over and over again. That lesson is coming soon as we head into earnings season for Q2 with some pessimistic estimates:
This is why I'm short the markets, folks, while uninformed investors are busy chasing past performance.
Nota bene: Anthony J. Alfidi is short uncovered calls on SPY and IWM.
Lately, however, as stock and bond markets have rebounded, mutual-fund investors have had a split personality.
They’re back to buying relatively safe investments like high-quality corporate bonds. But they’re also pouring money into the riskiest investments.
I don't need to go into the disadvantages of actively managed mutual funds here. Consider John Bogle's arguments against active management if you need reasons to know why mutual funds are a worse deal than index funds and ETFs. I also take issue with the article's assertion that high-quality corporate bonds (rated of course by the same credit rating agencies that completely misread MBS risk) are a "safe investment" in an era when public and private sector debt is over 300% of this country's GDP. Oh well. Some people are going to learn the hard way, over and over again. That lesson is coming soon as we head into earnings season for Q2 with some pessimistic estimates:
The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets.
This is why I'm short the markets, folks, while uninformed investors are busy chasing past performance.
Nota bene: Anthony J. Alfidi is short uncovered calls on SPY and IWM.
