1. Follow StockTwits for timely news on ETFs. Crowd-sourced information is an excellent way to get an edge on the market.
2. Don’t bother with index funds. They include way too many crappy stocks.
3. If you must use an index fund, make sure it’s enhanced.
4. Buy several mutual funds in each asset class. After three years, it will be clear which manager is the best, so you can sell the others.
5. Watch CNBC for daily info about where the market is headed. Jim Cramer used to run a hedge fun, you know. That means he knows his stuff.
6. Don’t worry about sales loads. If the manager has a proven track record, it’ll end up being worth it in the long run.
7. Bet heavily on emerging markets. Any chump can see that’s where the next decade’s growth will come from.
In case it isn’t immediately obvious, the above post is written in jest. The ideas are either a) terrible or b) backed up by decidedly faulty logic.
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{ 15 comments }
After reading this I had to go check the calandar. Yes it is March 1 not April fools day. You jumped the gun by a month here for these suggestions are clearly spoofs.
Hehe. I hadn’t thought to save it for April Fools.
I particularly liked the Fido Small-Cap enhanced index fund, where you can pay for the privilege of a .67 expense ratio and about a 143% turnover rate.
Mike, good dose of Monday morning humor. But seriously, you should add some comments below, so naive people don’t start following this! Your regulars get it, but think about someone trying to google “getting rich using mutual funds” one year from now and finding this!
I’m with GoYanks. I new it was a joke because I read you regularly. But I was waiting for the “punchline” at the end.
cd :O)
You should run the exact same post tomorrow but change the title to, “7 Easy Ways to Lose Money Using Mutual Funds.”
Great Advice! I’ll start doing using as my investment strategy. Especially the one about watching CNBC. Such great stuff on that channel.
very funny!
Cramer may act like a jerk on TV, but he isn’t a jerk. He isn’t a Boglehead either, but:
Quote from an analysis by Henry Blodget:
“After a lifetime of picking stocks, I have to admit that Bogle’s arguments in favor of the index fund have me thinking of joining him rather than trying to beat him.”
http://www.slate.com/id/2158497/fr/flyout
Written about Cramer:
For most people, however, he advises low-fee stock index funds.
http://www.portfolio.com/views/blogs/market-movers/2007/12/19/is-cramer-advocating-index-funds/
Cramer’s own words:
“You don’t have the time or the inclination to build and maintain a portfolio. . . . What can you do instead? I’ve got a couple of options, none of them optimal, but all of them acceptable. First, you can get your diversity and beat almost every single mutual fund manager simply by buying shares in a stock index fund. . . . Vanguard pioneered the S&P 500 index fund and is the cheapest and best one I can find.
“Why do most managers fail to beat index funds? Because it’s a lot harder to manage a lot of money than it looks. If you manage a traditional mutual fund and you do well, you will soon be inundated with money, which will cause you to change your style and, over time, unless you are incredibly good, you will begin to mirror an index fund, except you will be charging your investors higher fees.
“John Bogle, the most honest money manager in the business . . . .”
Jim Cramer’s Real Money, p. 198.
I love it!
8. Manage a mutual fund.
Actually, that method *does* work…
You missed the best one. Just buy one mutual fund. Make sure it is a sector fund and had a great return last year.
Excellent advice on how to lose your shirt. My favorite is buy every stock you get a cold call on……. I only wished it worked as well as the dart methodology for stock picking.
I don’t currently own any funds at all, but there are some ETFs out there that intrigue me. Interesting post.
The sad thing is that most people wouldn’t have known that you were joking.
Where I work, I’ve been trying to convince the administration to encourage an “index fund solution” for our employees saving for retirement. We have reps from Raymond James and those selling the U.S. based American Funds (charging front end loads of 5.75%) coming into our workplace, but I’ve struggled to convince the powers that be that these advisors sell inefficient products, especially after taxes.
I’m a Canadian, but the expatriate Americans I work with are going to pay for their lack of knowledge when unnecessary taxes couple with weaker than market performances.
We also have a Canadian broker selling high MER, back end loaded funds, who switches his investors from fund to fund, while his clients think he does that to make more money for them.
I don’t know if this drives you as crazy as it drives me. But I might need to take the Buddha approach, chill, and let capitalism look after itself.
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