Sunamerica Money Market

The bear market that showed up at the end of 2000 has any brokerage house and the entire mutual fund industry is scrambling to find creative ways to promote both their image and profitability. Unfortunately, it is often at the expense of investors.

Fund managers are always looking for ways to spin the stats to hide history of abuse and find ways to cool obscure. To add insult to (financial) injury, investors end up being penalized for sale. So what's the investor to do? In this case, knowledge is power. Some ways of mutual funds are expected:

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Performance is always an issue for any investor. Formerly great funds, I've used in years 90, is junkyard dogs of this century. Janus Fund comes to mind and is one of many that investors buy-and-hold stuck with. It is down 59%, because we have acted on our exemplary signal 10/13/2000.

* Most funds now have 12b-1 fees up, and some go as high as 1% of fund assets annually. Between fees, commissions and management fees, the industry of mutual funds is still being paid, even if you, the investor will lose money. For example, if you bought SunAmerica 2-1/2 years, you would have paid the fees above 2.35% per year. And if you've finally decided on your investment does not go anywhere, you have been stuck with 5% deferred sales charge.

* If you hold a fund less than 180 days, the intention being hit with a redemption. It is almost standard. What is the problem? Brokers are paid while you hold their funds. So if you sell, they get a last whack. It is a great deterrent to the sale, too. Can it be avoided? Not completely, but if you have your money managed by an investment adviser, the holding period is reduced to 90 days.

* Then there is the scam involving deceptive unloaded B-shares. Of course, investors pay nothing up front for them, but you'll be charged heavy discount when you sell. In addition, they exercise the higher management fees.

Keep in mind that mutual fund companies have market shares in mind, not your best interest. If you think that may not be true, consider the rate of growth funds soar pure technology. But look at them now: they crashed and burned and no buy & hold is out with a victory.

Then there is the sad story of incompetence in the industry of mutual funds. There are hordes of experienced financial planners (commissioned salesmen) just waiting to sell you load funds (A and B shares), or recommend an asset allocation approach, no real plan or strategy that will serve you in a bear market.

Of course, there is always the possibility of having a perfectly balanced portfolio designed. This was the case when a potential client called me in 1999 during the height of the boom in technology. He felt left out because everyone was making money in any market in history big bull, but his wallet was so well balanced that it was neither made nor lost anything. It would have been better in a money market account.

For me, the term balanced portfolio translates into this: I have no idea what I'm doing, where the major trend is what I should buy or if I should be on the market first. I am so much coverage that investment rises and the other goes down.

Balance is one thing and security is really another. And mutual funds do not automatically mean either security or balance. The key is always how to get information of reliable information and what it means once you have it.

This is not for everyone. If you have money to invest and you do not have time or inclination to do homework, your most appropriate is to find someone you trust.