Lehman Brothers files for Chapter 11 - Biggest Bankruptcy Ever

[zabu of nΩd]

Well yeah I wasn't talking about investment managers. Unless you can hire an investment manager at a reasonable price to handle all your investment work for you in the long term, I'd prefer leaving that work to a fund manager. There are plenty of fund managers to choose from anyway, so you can still find one who matches your risk preference.

 

[The Ozzman]

Well yeah I wasn't talking about investment managers. Unless you can hire an investment manager at a reasonable price to manage your money in the long term, I'd prefer leaving all that work to a fund manager.

Uh, that's their job. You don't hire a fund manager directly. The fund manager manages funds that you are able to buy yourself or through an investment manager.

His payment is based on a fee for the most part

 

[zabu of nΩd]

Yeah but wouldn't the individualised attention of an investment manager cost you a lot more in the long run than whatever fee the fund manager charges?

 

[Zephyrus]

It's posts like this that make people think you're a pretentious twat btw. Just saying.

What are you talking about?

 

[The Ozzman]

Yeah but wouldn't the individualised attention of an investment manager cost you a lot more in the long run than whatever fee the fund manager charges?

You can't hire a fund manager directly. The fund manager ONLY MANAGES THE HOLDINGS IN THE MUTUAL FUND. YOU, THE INVESTOR, BUY SHARES OF SAID FUND THAT CONTAIN SHARES OF INDIVIDUAL STOCKS THAT MAKE UP THE MUTUAL FUND THAT IS MANAGED BY THE FUND MANAGER.

Fund managers typically don't take on individual clients unless it's some sort of group program like pension plans or hedge funds (where you need a few million dollars to get in). With a fund manager, you don't have a say on what goes on with your money unless you want to get out of said fund.

You aren't going to be able to go to Merill Lynch and say 'Hey, I invested this much money into one of the mutual funds you run and I want you to drop these stocks and add these'. They will laugh at you.

 

[V.V.V.V.V.]

I DON'T EVEN KNOW WHAT WE'RE YELLING ABOUT

 

[zabu of nΩd]

You can't hire a fund manager directly. The fund manager ONLY MANAGES THE HOLDINGS IN THE MUTUAL FUND. YOU, THE INVESTOR, BUY SHARES OF SAID FUND THAT CONTAIN SHARES OF INDIVIDUAL STOCKS THAT MAKE UP THE MUTUAL FUND THAT IS MANAGED BY THE FUND MANAGER.

Stop shouting.

I'm pretty sure fund managers typically siphon off some percentage of their contributors' money as a kind of fee. Regardless of whether it's a fee you pay directly to the manager separately from the investment capital, you still end up giving some money to the manager instead of investing it.

 

[The Ozzman]

BUT CAPS LOCK IS CRUISE CONTROL FOR COOL

It depends on how direct you are. If you go to an investment adviser at your local CitiBank and start investing, they're going to charge a fee regardless of the amount of stocks you buy. That's their only form of income mostly. Some get a salary along with it, but the fee allows your adviser to be a bit more savvy in investing it and not making you do huge volume buys so that they can get a higher commission (which is a percentage of the volume of the shares they buy)

Even if you buy a mutual fund, there are some that offer no 'loads', which means that they don't require a fee from the person buying into the mutual fund. You would be a fool to not pick a no-load fund

 

[zabu of nΩd]

Your decision on a mutual fund should depend on how much your projected net return will be, not on whether there's a load. Duh.

All I'm saying is that I'm willing to give up control over my investments in exchange for not having to do any micromanagement of them. And from my understanding, the typical returns you would get on a good mutual fund are comparable with those you'd get with a good advisor, so I have little interest in going to an advisor.

 

[The Ozzman]

Your decision on a mutual fund should depend on how much your projected net return will be, not on whether there's a load. Duh.

You should be aware that there is no real difference historically between the performance of load funds and no-load funds in terms of year-to-year performance. In fact, according to the latest survey by the mutual fund data analyzer Morningstar, even excluding the drag on returns if the load were included in the calculation, no-load funds actually have a superior record to load funds over the last 3-year and 5-year periods.

Of course net return is probably the biggest factor one should consider if you don't know anything else about finance, but do you seriously want to pay more for something that won't get you a more significant amount of return?

Also, advisors can also educate you on which mutual funds you should get based on your risk preference and performance. You can do the research yourself and pick your own fund if you want to do that, however.

You might be better off with UITs (Unit Investment Trusts) or ETFs (Exchange Traded Funds)

 

[Xorv]

I have a question: are companies like Lehman required to report their balance periodically? I'm just wondering if this was a result of Lehman hiding their debts or of people simply putting too much faith in them despite their debts.

It's the result of ninja loans. No Income, No Job or Assets required.

(LULZ)

 

[zabu of nΩd]

Of course net return is probably the biggest factor one should consider if you don't know anything else about finance, but do you seriously want to pay more for something that won't get you a more significant amount of return?

Also, advisors can also educate you on which mutual funds you should get based on your risk preference and performance. You can do the research yourself and pick your own fund if you want to do that, however.

You might be better off with UITs (Unit Investment Trusts) or ETFs (Exchange Traded Funds)

Points taken. And I'll put UITs and ETFs on my list of things to research. I'm actually taking a financial management class this semester, and I think my professor's going over ETFs soon, so I'm looking forward to that.


edit: what's your source on that statement about load vs no-load mutual funds, btw?

 

[Unfaithfully Metalhead]

TA and FA are both equally important.

I do agree that this has nothing to do with fraud. This just crossed the line between 'risk management' and 'speculation'

EDIT: By the way, give me a good book on Technical Analysis that isn't a dictionary type of book.

We'll importance of TA/FA is really up to the individual. I find no use for FA and do quite well without it.

As for Lehman and the others, they didn't cut their losses when the trend showed they should of. They were being financially irresponsible. But then again it is difficult to unload the amounts they owned in bad bets when no one wants them except for pennies on the dollar.

For books and such I recommend the following (can be bought cheaply on Amazon.com used):

A Beginners Guide to Short Term Trading by Toni Turner (www.toniturner.com)

A Beginners Guide to Daytrading by Toni Turner

Trend Following by Michael Covel

How I made $2,000,000 in the Stock Market by Nicolas Darvas (yes i know the title can be silly but it's a traders classic and in it he uses a combination of Fundamentals and Technicals)

The Candlestick Course by Steve Nison (www.candlecharts.com)

Reminisces of a Stock Operator by Edwin Lefevre (highly recommended. The story about Jesse Livermore, probably the greatest trader of the 20th Century and his advice/philosophy on speculation/trading. He made $100 Million by going short on the Market when the 1929 crash hit. $100 Million in 1929 dollars.One of many fortunes he made.)

A Million A Minute, Inside the World of Traders by Hillary Davis (great book about the world of professional traders. Describes everything from Quantatives, Derivatives etc. and some famous or successful traders in each.)

www.stockcharts.com - nice section that teaches how to read charts and such.

www.bigcharts.com - my favorite free charting site

www.smallcapcenter.com - another decent site that has a good Technical stock screener for free

I thought that was the point of mutual funds - you pool your money under a manager who knows what they're doing, and also has the capital to diversify in ways that you never could. That and it's a pain in the ass to have to follow business news all the time just to make sure you're not about to lose a huge chunk of your money.

You can diversify just as much as they can if you take the time and disclipine to. Besides your own portfolio if you manage it well yourself or with advisor imo would get a much better return on your money then a MF since you own a whole share of a stock versus owning just a piece of it. As for keeping up with business news, we'll you don't necessarily have to if you know Technical Analysis and how to read charts for patterns and such. Usually whatever news is coming up reflects on a chart with "patterns" by insiders, professional traders, market makers etc. That's not to say business news isn't important but it is not always necessary. But if you read the newspaper everyday for sports or whatever just venture to the business section for a second and read the titles for anything interesting like tomorrow morning Bernake will go before Congress or the Fed will meet or OPEC is having a meeting etc. etc.

You aren't going to be able to go to Merill Lynch and say 'Hey, I invested this much money into one of the mutual funds you run and I want you to drop these stocks and add these'. They will laugh at you.

Yes, that is true but this also pertains to my point of no control over your investments. That is why the ones who do not like that should create their own portfolio with a financial advisor. Some accountants including your own accountants are Certified in such a field as financial advisory if you do not want to do it alone. As for Hedge Funds and having millions to enter one. For some if not the majority of them you need a invitation also to get in because they do not want a client to question them all the time.

All I'm saying is that I'm willing to give up control over my investments in exchange for not having to do any micromanagement of them. And from my understanding, the typical returns you would get on a good mutual fund are comparable with those you'd get with a good advisor, so I have little interest in going to an advisor.

Giving up control and not managing it yourself imo is called laziness. And as i already stated returns on a mutual fund do not even compare to having your own portfolio if managed right by an advisor and you. To me researching stocks and such is exciting.

Of course net return is probably the biggest factor one should consider if you don't know anything else about finance, but do you seriously want to pay more for something that won't get you a more significant amount of return?

Also, advisors can also educate you on which mutual funds you should get based on your risk preference and performance. You can do the research yourself and pick your own fund if you want to do that, however.

You might be better off with UITs (Unit Investment Trusts) or ETFs (Exchange Traded Funds)

Good advice... I think if someone is not willing to manage their own portfolio then an advisor is the way to go and worth more in fee's then anyone else.

As for ETF's, I love them. Here is where you can read up on them more:

www.amex.com - click on ETF's on the left side menu of the homepage

Points taken. And I'll put UITs and ETFs on my list of things to research. I'm actually taking a financial management class this semester, and I think my professor's going over ETFs soon, so I'm looking forward to that.


edit: what's your source on that statement about load vs no-load mutual funds, btw?

Check out the above link for ETF's. To me they are a exciting alternative to individual stocks, mutual funds etc.. You should take up Technical Analysis. It really is not that difficult. Check out the links/books i recommended above.

As for Load and No Load funds. It's taught in any basic business/financial course in College. It's always advised not to go into a Load fund if they are doing the same thing as a No Load fund. The less money you pay in fee's for the same service the better and more $$ in your pocket.

 

[The Ozzman]

Points taken. And I'll put UITs and ETFs on my list of things to research. I'm actually taking a financial management class this semester, and I think my professor's going over ETFs soon, so I'm looking forward to that.


edit: what's your source on that statement about load vs no-load mutual funds, btw?

http://www.fool.com/School/MutualFunds/Costs/Loads.htm

Just google 'mutual fund load' and you'll find tons of stuff about it

UM gives some good advice. When we talk about FA and TA, we are talking about Fundamental Analysis and Technical Analysis. For my job, FA is more important than TA because I don't have access to TA tools for mutual insurance companies, a company owned by the policyholders and not shareholders (like New York Life, for example).

It's dependent upon the person and how they would be using each method. I think you could make a good decision regarding stocks based on either method, but two heads are better than one they say.

Either way, TA still falls under the 'Past performance..' mantra because you're looking at past prices to try and predict future movements.

 

[zabu of nΩd]

You can diversify just as much as they can if you take the time and disclipine to. Besides your own portfolio if you manage it well yourself or with advisor imo would get a much better return on your money then a MF since you own a whole share of a stock versus owning just a piece of it. As for keeping up with business news, we'll you don't necessarily have to if you know Technical Analysis and how to read charts for patterns and such. Usually whatever news is coming up reflects on a chart with "patterns" by insiders, professional traders, market makers etc. That's not to say business news isn't important but it is not always necessary. But if you read the newspaper everyday for sports or whatever just venture to the business section for a second and read the titles for anything interesting like tomorrow morning Bernake will go before Congress or the Fed will meet or OPEC is having a meeting etc. etc.

Yeah I understand this, and I'm not trying to sound stubbornly ignorant or anything, it's just that at this point in my life I have very little interest in micromanaging an investment. That may change at a later time (i.e. maybe when I'm out of college, have a full-time job, and am able to do any real saving). But in my current mindset I'm willing to accept a lower profit margin if it means I don't have to think about money on a regular/daily basis.

Giving up control and not managing it yourself imo is called laziness. And as i already stated returns on a mutual fund do not even compare to having your own portfolio if managed right by an advisor and you. To me researching stocks and such is exciting.

And to me it seems tedious and time-consuming. Besides, look at it this way: even if I just dump my money into a MF (or ETF, if that happens to be comparable), it's still a lot better than not investing at all.

Good advice... I think if someone is not willing to manage their own portfolio then an advisor is the way to go and worth more in fee's then anyone else.

That may be so. I may reconsider going to one at some point. Or taking some FA or TA classes.

As for ETF's, I love them. Here is where you can read up on them more:

www.amex.com - click on ETF's on the left side menu of the homepage

Yeah, I'll probably read up on them sometime in the next few months.

http://www.fool.com/School/MutualFunds/Costs/Loads.htm

Just google 'mutual fund load' and you'll find tons of stuff about it

UM gives some good advice. When we talk about FA and TA, we are talking about Fundamental Analysis and Technical Analysis. For my job, FA is more important than TA because I don't have access to TA tools for mutual insurance companies, a company owned by the policyholders and not shareholders (like New York Life, for example).

It's dependent upon the person and how they would be using each method. I think you could make a good decision regarding stocks based on either method, but two heads are better than one they say.

Either way, TA still falls under the 'Past performance..' mantra because you're looking at past prices to try and predict future movements.

Cool. Well thanks for pointing me in a good direction guys. Some day or other I'm sure I'll want to know more about this stuff.

 

[Blind Guardian]

I actually think this economical chrisis that's going on is satisfying in a way. I like when America does bad,of course i dont wish this to any of all the decent Americans(and i assume the majority are) but there's something in me that's thinking "haha yes,in your face!" in direction to all the holier than thou,über patriotic and narrow minded idiots i have stumbled upon in my days from America. People who refer to any other country as "the rest of the world" and have this patronizing attitude to all other countries. Soon another country will be the most powerful in the world,and that they will not be able to handle. And yes i know that this also affects me and that it's not good at all for any western country,but it doesn't affect me as directly as America.

 

[V.V.V.V.V.]

It affects the global economy you silly sausage.

Also your view of America is horribly dumb.

 

[The Ozzman]

There are no classes for FA or TA. FA is learned in an intermediate finance class (or might be taught in your financial management class depending on the difficulty). TA is something you learn outside of the classroom

 

[Blind Guardian]

It affects the global economy you silly sausage.

Also your view of America is horribly dumb.

No it's not dumb,as i said most Americans aren't like that,my ill will is against those who are,and also as i said i know it affects everyone but it affects no one as hard as America itself,it wont for example make me lose my job. I dont wish an economic depression to the majority of America,but i take malicious pleasure in knowing that it'll hurt those who think America is better than all other countries.

 

[The Ozzman]

No it's not dumb,as i said most Americans aren't like that,my ill will is against those who are,and also as i said i know it affects everyone but it affects no one as hard as America itself,it wont for example make me lose my job. I dont wish an economic depression to the majority of America,but i take malicious pleasure in knowing that it'll hurt those who think America is better than all other countries.

This doesn't make any sense because economic events like this hurt every American.