The mutual fund industry and small investors are very relentless and very unforgiving if people don't perform.
Sentiment: NEGATIVE
There's accountability in the mutual fund industry. And they've been tremendous engines of wealth for people and they're going to continue to be so.
Mutual funds give people the sense that they're investing with the big boys and that they're really not at a disadvantage entering the stock market.
I'm sometimes accused of being hostile to mutual funds. That's not fair, really. There is a place for them. Still, I am hostile to one thing, which is trying to use funds to time your way in and out of the market. That's a recipe for very bad results.
But successful investors tend to be not too self-destructive. They tend to be patient, they tend not to follow the crowd, and they tend not to be too guilty about winning.
I just don't like mutual funds. I think they're a rip-off.
Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high - some say excessively high - fees; their short- and long-term performance has been poor.
Investors tend to discover 'hot' mutual fund managers just after a successful run and just before the inescapable force of mean reversion is about to kick in.
The ability to select stocks, manage them over time and know when to sell them is incredibly difficult, even for professional fund managers.
Plenty of funds have fine long-term returns despite being tax-inefficient and generally costly. But a dirty secret is this: Average, no-load fund investors do much worse than the funds - or the market.
Mutual funds dare to be average. In fact, they dare to be lousy. They have long since ceased striving for anything resembling perfection when it comes to managing your money.