Thursday, April 29, 2004
In Vendito Veritas
Got my CBS Marketwatch Mutual Funds newsletter in my email box today.
The lead story is about how mutual fund companies like Janus who got caught with their grubby fingers in the market-timing* cookie jar are trying to put behind them the fact that NY Attorney General Elliott Spitzer caught them red-handed conspiring to screw their shareholders.
The thing is, when I look down at the sponsored links advertising on their email newsletter, two of the five advertisements are for market timing systems. At least one of them specifically issues buy and sell signals for market timers on mutual funds, including the Rydex Funds and the Fidelity Select Gold fund, as well as for small cap funds, where the lower liquidity means higher trading costs and bid/ask spreads, which means timing activities are even more destructive to the average buy-and-hold shareholder.
So CBS Marketwatch will pay lip service to the buy and hold investor. But they'll take ad revenues from companies who work to make suckers out of them through market timing.
More, it's obvious that these parasites are still finding willing hosts in the mutual fund industry, although mostly with a few funds.
So if you're a buy and hold mutual funds investor, check your prospectuses carefully. Avoid funds that cater to or tolerate systemic market timing by these firms and their clients. Specifically, avoid Fidelity's sector funds, the Rydex funds, ProFunds, and any open-ended sector funds which attract timers' money.
Further, to really get to know an industry, watch the ads, as well as the editorial content. After all, in vendito veritas
In sales, there is truth.
Splash, out
Jason
*For those of you who aren't mutual fund junkies, market timing, along with late-trading, is sort of the investors' equivalent of defacating on the seat. Sure, it can get the job done. But it's screws everyone else in the fund who buys and holds, because they have to pay for the fund timers' trading costs, and keep extra cash in the fund to hedge against redemptions. Which means they lose out a few points on every market gain.
But it's good for fund companies who want to attract assets, since they get a percentage of everything they manage. And it's good for fund timers, who need a host organism to feed off of. It just hurts everyone else. Like you and me.
The lead story is about how mutual fund companies like Janus who got caught with their grubby fingers in the market-timing* cookie jar are trying to put behind them the fact that NY Attorney General Elliott Spitzer caught them red-handed conspiring to screw their shareholders.
The thing is, when I look down at the sponsored links advertising on their email newsletter, two of the five advertisements are for market timing systems. At least one of them specifically issues buy and sell signals for market timers on mutual funds, including the Rydex Funds and the Fidelity Select Gold fund, as well as for small cap funds, where the lower liquidity means higher trading costs and bid/ask spreads, which means timing activities are even more destructive to the average buy-and-hold shareholder.
So CBS Marketwatch will pay lip service to the buy and hold investor. But they'll take ad revenues from companies who work to make suckers out of them through market timing.
More, it's obvious that these parasites are still finding willing hosts in the mutual fund industry, although mostly with a few funds.
So if you're a buy and hold mutual funds investor, check your prospectuses carefully. Avoid funds that cater to or tolerate systemic market timing by these firms and their clients. Specifically, avoid Fidelity's sector funds, the Rydex funds, ProFunds, and any open-ended sector funds which attract timers' money.
Further, to really get to know an industry, watch the ads, as well as the editorial content. After all, in vendito veritas
In sales, there is truth.
Splash, out
Jason
*For those of you who aren't mutual fund junkies, market timing, along with late-trading, is sort of the investors' equivalent of defacating on the seat. Sure, it can get the job done. But it's screws everyone else in the fund who buys and holds, because they have to pay for the fund timers' trading costs, and keep extra cash in the fund to hedge against redemptions. Which means they lose out a few points on every market gain.
But it's good for fund companies who want to attract assets, since they get a percentage of everything they manage. And it's good for fund timers, who need a host organism to feed off of. It just hurts everyone else. Like you and me.
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