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NFT: Morningstar Ratings

Samiam : 9/12/2017 6:25 pm
I'm throwing this out for comment from people who know alot about investing (or think they do). How important is the Morningstar rating to your calculations? If one of your mutual funds has a low rating -which I guess is 1 or 2 stars - do you sell or exchange - leaving taxes aside- based on the rating? Is there a rating service that's better or is it your opinion and/or your financial advisor/
Index funds.  
DonQuixote : 9/12/2017 6:54 pm : link
Just dollar cost average into an index fund with virtually zero fees and you will beat the average. The reason is that the average broker (or fund manager) has to take money off the top, so they need to outperform the S&P just to achieve what the S&P does. By definition, the average broker does not do that.

Don't trade in or out of funds...all your money is made on a small subset of days where the market rises a lot. If you are not in the game on those days, you're done.

Dollar cost average into an index fund and stay in the market.


Unless I only have  
Gman11 : 9/13/2017 6:26 am : link
a couple thousand to invest, I don't bother with mutual funds. I've had more success with a diversified portfolio of individual stocks.
I dont look at them at all  
Deej : 9/13/2017 7:29 am : link
but that's because Im an index fund investor. I am in 5 Vanguard funds, and I dont actively research them.

But if Morningstar is at 1-2 stars, there is probably a big issue at those funds. Unjustifiably high fees, management issues, etc. I wouldnt sell on the star rating, but the explanation would probably make me a seller.
Where do you guys do your trading  
UConn4523 : 9/13/2017 7:45 am : link
?
Why buy a mutual fund in the first place?  
WideRight : 9/13/2017 8:14 am : link

Are they better investments?
RE: Why buy a mutual fund in the first place?  
UConn4523 : 9/13/2017 8:15 am : link
In comment 13596826 WideRight said:
Quote:

Are they better investments?


You largely set it and forget it. For people who don't have time or the knowledge to keep up with the markets they are a good alternative.
I wouldn't do anythng based on a single rating  
njm : 9/13/2017 8:42 am : link
First thing I would do when I see a low rating is discover why it's low. It's a starting point, not an end point.
RE: RE: Why buy a mutual fund in the first place?  
Deej : 9/13/2017 9:15 am : link
In comment 13596828 UConn4523 said:
Quote:
In comment 13596826 WideRight said:


Quote:



Are they better investments?



You largely set it and forget it. For people who don't have time or the knowledge to keep up with the markets they are a good alternative.


At least for broad based index funds/etfs, I think it's more than just lack of time/knowledge. I just fundamentally believe that Im unlikely to "beat the market" no matter how much time I put in or studying I do. I think there are people who can consistently beat the market -- some people are just really good at this. I dont believe that I am one of them. And if a bunch of brilliant hedge funders etc. are beating the market, it means someone is not beating the market -- it would likely be me. So Im happy to just take the market returns, paying a ridiculous .04% and .11% expense ratios on my domestic and foreign index funds, respectively.

It's not a no-brainer -- I wish there was a product that invested in 90% of the market but weeded out 10% of the worst looking companies. But it's a smart play beyond just laziness IMO.
Speaking of Investing  
NNJ Tom : 9/13/2017 9:46 am : link
Anyone know what happened to Phil in WNY? He was a portfolio manager and highly knowledgeable about investing. He would send his news letter around a few times a year.

He was always extremely bearish, but he made some good points in his own defense. I don't even see him listed on the members search.

Anyone know?
Deej  
Samiam : 9/13/2017 11:05 am : link
Excellent write up. Never thought of it that way; makes a lot of sense
RE: Speaking of Investing  
giants#1 : 9/13/2017 11:14 am : link
In comment 13596978 NNJ Tom said:
Quote:
Anyone know what happened to Phil in WNY? He was a portfolio manager and highly knowledgeable about investing. He would send his news letter around a few times a year.

He was always extremely bearish, but he made some good points in his own defense. I don't even see him listed on the members search.

Anyone know?


He wasn't 'always' bearish. Just bearish in the run up to the recession and (IIRC) a couple years afterwards.
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