Ask The SEC

Who is the SEC and why should I ask them anything? The Securities and Exchange Commission in Washington, DC is the government bureau that regulates the securities industry. They make the regulations that all stock exchange listed companies, brokerage houses and mutual funds must follow.

My readers know that I am a believer in the purchase of mutual funds for investment and retirement accounts. The reason is that very few people are qualified to choose stocks. Unfortunately that also applies to many mutual fund managers especially when you look at the performance of the majority of funds for the year 2000.

I can excuse the average Joe for not being able to pick winners, but I cannot excuse a fund manager who is paid huge amounts of money (always 6 figures and mostly 7 figures) to lose the cash of the little people who invest. There are 77,000,000 owners of mutual funds and 80% of them have less than $50,000 in their accounts. Why is anyone giving them their money to have them lose it? These are the "experts".

Yes, they are accountable to you, but there is only one way to make that accountability register and that is to close out your account. If you are losing money then take it away from your current "expert" and put it with a mutual fund that is currently going up. And when that one starts down you switch to another one that is going up. My experience shows you will not be changing more than about once or twice a year. But you will not give back 30% to 50% of your money by doing this.

You see mutual fund managers are paid not on performance, but on how much money they have in the fund. That is one of the reasons they always tell you to Buy and Hold. You buy. They hold. They make money. You don't.

Back to the SEC. Here is what you need to ask them. Why can't mutual fund managers be paid a percentage of the profits they generate rather than skimming a percentage off the top every year even when they lose the customers' money? I doubt you will get a satisfactory answer, as you can be sure the mutual fund lobby has more influence than you do. The same may be true if your Congressman were to institute that as a law. He gets campaign contributions from the lobbyists.

This rule is already being allowed for hedge funds, which are very similar to mutual funds; however, only rich people can buy these. Maybe it is time someone had the SEC look after the interests of the small mutual fund investors. If you get an answer please let me know.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

---

Realistic Investing Expectations

Over the long term stocks have provided us with great average return results. But this average return masks a great deal of volatility, because returns have fluctuated... Read More

Dumb Money

Many people have, at one time or another, taken some of their hard-earned funds, and decided to put them in the stock market. These well-meaning individuals either... Read More

Investing Psychology Today Requires All Traders to Awaken Their Speculator Minds

Stock trading strategies are as rampant today, as they were during the Great Bull Market. Yet, can you truly master the stock market like so many investing... Read More

Brain Snappers and Other Wall Street Nonsense

The last time you spoke with your broker did he use any of the following words? Diversification, Price-to-earnings ratios, discretionary trading, lifting a leg (he's talking to... Read More

Ask The SEC

Who is the SEC and why should I ask them anything? The Securities and Exchange Commission in Washington, DC is the government bureau that regulates the securities... Read More

Rolling your 401k: Contributory IRA vs. Rollover IRA

In an ideal world you would start your working career with a great company in your early 20s, steadily climb the corporate ladder, retire at age 65,... Read More

Scots Beat Yanks in China Bank Deal

With visions of an ATM in every neighborhood in China, foreign banks and investment firms are queuing up to join the "China Club."Moneybags CommunismThe initiation fee for... Read More

Chinas Great Missed Opportunity

While a U.S. Representative to the Asian Development Bank Executive Board of Directors during the first Bush Administration, I consistently called for China to "bite the bullet"... Read More

The Economy Is Not The Stock Market

Several days ago, the Commerce Department reported that May's factory orders had increased by a 2.9 percent. This was well covered by 'the press', as it was... Read More

Why You Need To Buy and Sell Gold Coins (Part 5)

Grading coinsThe condition of a coin is commonly summarized by a grade. Because the value of collectible coins often varies dramatically with grade and overly generous grading... Read More

IF - The Wonders of Investing

If it seems as if all investors are selling, who is buying?... Read More

Beta Factors: How They Can Be Used In The Current Situation

Ever since the turn of the century, world stock markets have been very volatile. In other words there have been significant movements (up or down) in share... Read More

The Realities Of Market Timing

Market timing systems are based on patterns of activity in the past. Every system that you are likely to hear about works well when it is applied... Read More

25 Ways to Find Companies to Buy

When you start your program to purchase your "ideal" company, you quickly realize that your ultimate success will depend on two primary skill sets: 1) Your ability... Read More

Wit and Wisdom on Money, Wall Street and Success - Part #4

Can you concisely summarize your investment philosophy in a few sentences? My experience is that most people can't. The quotes that follow are diamonds that offer a... Read More

In a Time of Need

As I take my leisurely walk with my dog through the older section of the local cemetery, I pause to read the details on the barely legible,... Read More

California Deparment of Corporations and Franchise Opportunities Law

What CA Needs To Do To Address Issues in FranchisingWe should not allow anymore degradation of California through incessant over regulations in the franchising sector. No other... Read More

Boost Your Income With Financial Spread Betting

About 6 years ago I started to notice that certain friends of mine had quit their jobs but continued to live very luxurious lifestyles - seemingly without... Read More

Making It Second Nature

Not long ago I was laying on my son's floor throwing one of his toy balls back and forth in the air to myself and I had... Read More

Investing As A Sport?

I said last week that money doesn't generally buy happiness, but the lack of it can buy absolute misery. This, by the way, is not just my... Read More

Franchise Investing, Franchise Opportunities and Franchising Renewals

Have you considered buying a franchise instead of trying to start a business from scratch. Many franchise agreements are renewed every five or ten years, automatically. If... Read More

Trading For A Living - Part 2

In part 1 of this article I started to look at the financial implications of giving up the day job to instead start trading full time for... Read More

Annuity Investment - The Whole Truth

Do you ever feel like you haven't been told the whole truth? Kind of like something is missing? Well, you are not alone.With many investors awestruck over... Read More

To Retire Rich, Save and Invest Early

If you want to retire rich, start saving investing early. The most powerful tool when it comes to retiring rich, is compounding your returns on money saved... Read More

The Three Legged Stool

My paternal grandparents were born near Lake Como, Italy. My grandfather learned how to farm, and he did just that until he died chopping wood at age... Read More

Investing Pointers for Neophyte Investors

If you know next to nothing, how do you go about the business of investing? The first thing you need to know about investing is, how much... Read More