Opinion on American Funds

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Mar 19, 2008 5:30 pm

[quote=anabuhabkuss]Check this out:

  http://money.cnn.com/2008/03/18/pf/funds/Ask_the_mole.moneymag/index.htm?section=money_pf   I don't know who I hate more: people who turn to journalists for answers or journalists who give "advice" not knowing a person's full picture. [/quote]   And so the guy recommends C Shares.  That makes sense.  He thinks A shares cost too much, so buy C shares.  While I use C shares in many cases, his advice is flawed.  Some people are just firmly entrenched in the "only buy cheap index funds" camp.  Well, go buy VFINX and hope for he best.  I wonder what the no-load DIY'ers are all doing right now with their investments.  Hmmmmm......
Mar 19, 2008 10:25 pm

Is there any case in which an EJ advisor would recommend a no load fund?  Do they even have the ability to make that recommendation or are they stuck selling one of the preferred fund families?

Mar 19, 2008 11:08 pm

We would not sell no-loads, but we can sell virtually all fund families that other broker/dealers sell. So no, we are not stuck with the Preferred Funds. I use non-preferred funds routinely (though the core of my holdings are generally American and Franklin Templeton, both of which are preferred).



Keep in mind, a broker/dealer is only going to sell products (generally) that generate a commission or are under some type of fee. So a B/D would only sell no-loads in a fee-based account. I am told that the EDJ advisory account will allow no-loads as part of their offerings. Basically, we don’t work for free.

Mar 19, 2008 11:53 pm

If you go to Morningstar, they list INVESTMENT (dollar weighted) returns and you can also access INVESTOR (time weighted) returns.  Take a look, it is a real eye opener.  Reminds me of the story of Magellan,  Peter Finch was god on Wall Street yet half of investors in the fund lost money.

Mar 20, 2008 12:02 pm
Bluetang:

If you go to Morningstar, they list INVESTMENT (dollar weighted) returns and you can also access INVESTOR (time weighted) returns.  Take a look, it is a real eye opener.  Reminds me of the story of Magellan,  Peter Finch was god on Wall Street yet half of investors in the fund lost money.

  I tell that story (about Peter Lynch) all the time during seminars and classes I teach.  When you map it out on a whiteboard, people actually get it.  I get a lot of "man, that's so true!"
Mar 20, 2008 8:18 pm

Peter Finch???  WTF???  Too much beer.  Sorry.

Mar 20, 2008 8:44 pm

Yeah, but in that article he was up against a FULL load no breakpoints.  Remember 10yrs of C = conversion to A with American.  Very little long term expense difference in that situation and much better flexibility. 

  I would recommed C shares to anyone thinking of American at Full load.