Why I Blog About Mutual Funds

On January 19th, 1996, I walked into my bank and asked for help investing my savings. The 'salesman' I met sold me some funds with a song and dance about his recommendation being a good portfolio for someone my age with my risk tolerance.

At the time, I knew nothing about investing, so I did not know that there were reasonable alternatives that did not entail 5% back end sales loads and absurd expense ratios (all four of these terrible funds have expenses over 1 1/2%).

Here is what I was sold:

$1000 Putnam New Opportunities 28.629 shares PNOBX
$1000 Putnam Global Growth 102.249 shares PEQBX
$4000 Putnam Growth and Income 251.731 shares PGIBX
$2000 Putnam Voyager Fund 139.958 PVOBX

Not only did I pay way more than necessary, I missed out on huge gains that many other mutual funds were racking up. Most other funds in the same categories these 4 funds invest in would have been better options.

Had I held on to those funds, my initial investment would be worth $15,120.25 today. That is not even double my original investment for a diverse portfolio invested in equities for over a decade.

I'm not going to go on a rant about Putnam. These days you can google Putnam and easily find out how well it is doing.

I watched my funds lag their peers during the hot 90's market and on March 3rd, 2000 I sold them and invested in a portfolio of Janus funds.

My timing could not have been worse.

Seriously.

I missed the peak of the dot.com bubble by 3 days.

Here is what I bought:

That's right- I'm sitting on a 29.70% loss, 8 years later. Maybe I should link to this post instead of my current disclaimer!

What upsets me more than that loss, however, is the $@!#@#* who sold me those terrible Putnam Funds.

"Why?" you might ask, "At least with the Putnam Funds, you would have made money."

Yes, I answer, but had I known in 1996, what I knew in 2003, which was not much about economics or timing, but a bit more about low cost no-load funds... and invested my $8000 in 4 roughly equivalent Janus funds from the group of Janus funds I actually bought in 2000...


...I would have more than tripled my investment.

My current approach for non-retirement investing is to invest in no-load, no-fee funds with low expenses that have a long record of doing well in their respective categories compared to their peers and indexes. I pick funds from different fund families when all other things are roughly equal. And I pick funds that allow $100 or lower subsequent investments so I can add to each fund consistently over time.

I have actually held on to JAGIX, JAMRX and JAENX. I traded in JAWWX for JAOSX a while ago. And by adding to those funds, I have made up some ground.


The experience of getting hosed by my bank and then getting wupped by bad timing provided incentive for me to learn more about investing. I'm not sure I have the right formula now, but I feel much better about my approach and am learning more all the time.

Adding Short Term Bond fund APST to WylieMoney Slowly Portfolio

Today is the day I'm adding a Short Term Bond fund to WylieMoney Slowly Portfolio. As I noted before, I 'm adding APSTX American Performance S/T Inc N/L My Original Post.

Fund of the Week: DJP iPath Dow Jones-AIG Commodity Idx TR ETN

Last week, Natural Resources and Bonds were up. DJP iPath Dow Jones-AIG Commodity Idx TR ETN, last week biggest loser, was up the most.

Real Estate and Financial Companies, including last week's top performer, SWFFX, were down.

Portfolio Update 5/9/08: The Song Remains the Same

Despite a very strong March and April, is it possible that the song remains the same?

Not just because Natural Resources and Bonds rose this week as Real Estate and Financial Companies fell which has been the song playing in the financial markets for many, many months...

But also because oil prices are spiking now like they were in 1973 (the year 'The Song Remains The Same" was performed in the link above).


Once again, only the WylieMoney portfolios and my brokerage account have posted gains since 05/01/07. None of the portfolios are in positive territory year-to-date.


The ETF 20 portfolio rose back above my IRA and the Lazy 20 Mostly Index portfolio pulled back ahead of the Three Fund Index.

WylieMoney 20 Mostly Managed


WylieMoney Slowly

Lazy 20 Mostly Index


Three Fund Index

ETF 20

S&P 500

Next WylieMoney Slowly Fund Category: Short Term Bond

The thirteenth fund category I researched for my mutual fund portfolio experiment was short term bonds. Typically I have been adding one fund per month from each category, to the WylieMoney Slowly portfolio on the first significantly down day of each month.

Bonds typically rise in value when equities plummet and vice versa, so this month, on the next day that US markets are up significantly, I will hypothetically invest $2500 into a Short Term Bond Fund.

The fund Ioriginally chose for this experiment was APSTX American Performance S/T Inc N/L My Post. The fund I actually own in this category in my brokerage is JASBX Janus Short Term Bond. These are still the best two options available for no fee and no load through Etrade for an intial investment of $2500 or less.

Recently, APSTX has struggled losing 1.11% in value over the last month compared to a 0.24% gain by JASBX. The Janus fund has lower expenses but much higher turnover. The Janus fund appears to have a new fund manager, while the American Fund's manager has been on board for 4 years.

Since this experiment started on May 01, 2007, JASBX has doubled the return of APSTX. The combination of lower expenses and better performance even over a 10 year period give the slight edge to JASBX but I already have 3 Janus funds in the WylieMoney Slowly portfolio. JASBX has higher turnover and a slightly lower overall bond rating.


Also, JASBX has over 77% of its assets concentrated in its top holdings. So I'm choosing APSTX which is more diverse, has slightly better credit quality in its holdings, lower turnover, slightly longer management tenure and is not another Janus fund in my portfolio.

Fund of the Week: SWFFX Schwab Finacial Services

The top performing fund last week, from the funds in my mutual fund experiment and my own brokerage, was SWFFX Schwab Financial Services.

The remaining 9 funds in the top ten were from a variety of categories which is a little odd. Often, value or growth or specialty or real estate will have a good week and you will see the managed, Vanguard and ETF picks I made from one or two of those categories all in the top 10. This week, Growth, Value, Small, Large, Domestic, International, Specialty, Emerging, are all represented.

None of them are up a great deal more than the others and that is why I think the mix is so broad. Interestingly, most of the top funds are managed funds, not index offerings.

The worst performing fund was DJP iPath Dow Jones-AIG Commodity Index. The other Natural Resources investments I track round out the bottom three. The other sector that took a bit of a beating was Real Estate.

Portfolio Update 5/02/08: Road to Nowhere

The first weekly update after a full year watching this experiment, I feel a little like I'm on the road to nowhere.

The WylieMoney 20 Mostly Managed portfolio is up the most and the S&P 500 index fund is down about the same amount. My Brokerage is up a little, my IRA is down a little. The 20 ETFs tracking the 20 categories I chose are down 0.63%. The 20 Vanguard funds (mostly index funds) tracking those same categories are up 0.56% collectively. The simplest of the portfolios, the Three Fund Index, sits in the middle of the pack, up less than half a percent.


Even though things seem flat overall, the WylieMoney mostly managed portfolio is up over 2 1/2% over its closest direct competition (portfolios tracking the same categories) the Three fund Index.

Was March the low point on this road? Only time will tell...

WylieMoney 20 Mostly Managed WylieMoney Slowly Three Fund Index Lazy 20 Mostly Index ETF 20 S&P 500