tag:blogger.com,1999:blog-238296312011-04-21T18:31:00.070-07:00merlaqsmithiehttp://www.blogger.com/profile/15499934742878502085noreply@blogger.comBlogger31100tag:blogger.com,1999:blog-23829631.post-1144094856160535012006-04-03T13:07:00.000-07:002006-04-03T13:07:36.196-07:00<br /><br />Successful Investing Avoiding Implementation Shortfalls ( Mutual Funds )..An issue every investor faces is that of successfully<br />implementing his investment strategy.<br /><br /><br /><br />Its nice to read or hear about great investing strategies but<br />oftentimeswhen you try to implement themthey fail to deliver<br />thesuperior returns.<br /><br /><br /><br />Here are some key points to consider to maximize your chance of<br />success when you implement your strategy.<br /><br /> Transaction Costs<br /><br /> Advertised performances seldom take into account trading costs.<br />One reason is that costs will be very different depending on<br />which stock broker you use.<br /><br /><br /><br />Ensure your Trading Cost is kept under 1%. Reciprocallyalways<br />remove a good 1% for transaction costs from any performance<br />numbers you see.<br /><br /> BidAsk spread<br /><br /> This is a hidden fee and can be a Killer. It is too easy not to<br />pay attention to: for instanceBidAsk spread is not included<br />in Mutual Funds Expense Ratios. Very few studies or<br />performances from investment books take it into account. <br /><br /><br /><br />BidAsk spread is larger for small Cap (sometimes in excess of<br />1%) than for large Cap (usually less than 0.25%).<br /><br /><br /><br />Turnover rate is also very important. <br /><br /><br /><br />Value Investing with lower turnover rate and larger market<br />capitalizations will suffer less than Momentum strategies that<br />typically invest in smaller cap and keep stocks for just months,<br />weeks or even days.<br /><br /><br /><br />For instancea strategy investing in small cap with 1% average<br />BidAsk spread and an annual turnover rate of 300% will loose<br />1%Mutual Fund300%=3% per year. This is on top of trading costs !<br /><br /> Can you execute thetrades ?<br /><br /><br /><br />Most investment strategies assume that you Buy and Sell Stocks<br />at specific time but can youin practicebuy or sell at that<br />specific time ?<br /><br /><br /><br />How often have you seen Stock Picks recommendations often on<br />weekends but then on Monday it is impossible to execute at<br />theFridays price because theshare skyrocket 20% at the<br />opening.<br /><br /><br /><br />Latertheguru proudly announces that his stock pick<br />outperformed but you could not buy at theset price so could not<br />reap theadvertised gain. <br /><br /><br /><br />This can be an issue for strategies with frequent trades. Again,<br />Value Investing will suffer less because there are fewer trades<br />so it is less sensitive to exact entry/exit points. If you use<br /><a<br />href=.....mechanicalinvesting.com/markettiming.html Mar<br />ket Timing favor systems with few signals per year.<br /><br /> Diversification<br /><br /> After a strategy is highlightedit is not rare to see it<br />underperforming. A good example is theDogs of theDow. The<br />strategy underperformed after it was detailed in theearly 90s.<br /><br /><br /><br />Many attribute its underperformance to thefact that too much<br />money flowed into thestrategy thereby reducing its efficiency.<br />I rather attribute its underperformance to thebiggest Bull<br />Market in History where Value Investing was less rewarding than<br />Growth/Momentum.<br /><br /><br /><br />A take is that every strategy will underperform at some point.<br />This is when your nerves will be at test and when you will be<br />tempted to abandon and switch strategy... only to see it<br />outperform afterwards.<br /><br /><br /><br />thesimple solution highly recommended is to diversify with<br />2 or more investing strategies.<br /><br /><br /><br />Since thentheDogs of theDow has been outperforming theDow<br />Jones and theS&P500 since 2000.<br /><br /> Conclusion for Successful Investing<br /><br /> Whatever your investment strategythere will be a difference<br />between paper profits and real profits. This is true even if you<br />invest in Index Funds. <br /><br /><br /><br />To maximize your chance of success in theStock Market:<br /><br /> Strive to keep transaction costs below 1% per year<br /><br /> Pay great care to strategies investing in Smaller Cap with<br />high BidAsk spread<br /><br /> Beware strategies with frequent trades<br /><br /> Diversify <br /><br />About theauthor:<br />Jacky Pandion is a DIY Investor. He advocates a disciplined way<br />to invest in thestock market. Visit<br />.....mechanicalinvesting.com www.mechanicalinvesting.com for <a<br />href=.....mechanicalinvesting.com<br />target=_New Successful Stock Investing strategies . <br /><br />((( top mutual funds )))<br />-geeI<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/23829631-114409485616053501?l=tipsdavismutualfunds.blogspot.com' alt='' /></div>merlaqsmithiehttp://www.blogger.com/profile/15499934742878502085noreply@blogger.com2tag:blogger.com,1999:blog-23829631.post-1142350903576978242006-03-14T07:41:00.000-08:002006-03-14T07:41:43.586-08:00<br /><br />Your best articles on Mutual Funds hot tips and information on Investments in the Global Mutual Fund Market...Control Post #...<br /><div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/23829631-114235090357697824?l=tipsdavismutualfunds.blogspot.com' alt='' /></div>merlaqsmithiehttp://www.blogger.com/profile/15499934742878502085noreply@blogger.com2tag:blogger.com,1999:blog-23829631.post-1142019854915675012006-03-10T11:44:00.000-08:002006-03-10T11:44:14.920-08:00<br /><br />More exciting news for Mutual Funds hot tips and info on Investment in the Mutual Fund Market<br />-WcBvdd-WcBvddxyxfytwvLmBcWh<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/23829631-114201985491567501?l=tipsdavismutualfunds.blogspot.com' alt='' /></div>merlaqsmithiehttp://www.blogger.com/profile/15499934742878502085noreply@blogger.com1