How to get Investment Tax Advice — FREE!

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I am sure that during your investing endeavors, you will come across a situation where some qualified input from a tax professional might be of tremendous help. Or, maybe you just like a second opinion?

One of my newsletter readers, a former corporate CPA, has offered to answer any questions you may have in that area. His blog contains a wealth of information and, if you are in need of assistance, feel free to post a question in the comment section of his blog:

I hope you find this useful.

The most commonly asked Mutual Fund/ETF Investment Questions

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Over the years, I have received hundreds of investment related questions from my newsletter readers.

These questions, and my answers, represent a wealth of knowledge, which has been archived and is readily available to you. The archive dates back to May 2003 and contains over 200 Reader Q & A’s.

You can view it at:;

Whether you are new to investing, or a seasoned veteran, there is bound to be some information contained in this archive which can help you become a better investor.

No Load Fund/ETF Tracker updated through 1/5/2007

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My latest No Load Fund/ETF Tracker has been posted at:

Despite this week’s sell off, our Trend Tracking Index (TTI) for domestic funds remains in a Buy mode as the chart below shows:

As of today, the TTI has come off its high, but still hovers +4.66% above its long term trend line.

For more details, please see the above link.

Mutual Fund/ETF Investing: How to Track your Stop Loss Points

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If you follow a methodical way to investing in no load mutual funds/ETFs, as I do, you most certainly will have learned the use of trailing sell stops to either lock in profits or limit any potential losses.

Putting money into the market without them is gambling and not investing. Despite the fact that you can’t place a stop loss with a mutual fund company, you nevertheless need to track it and place the order whenever it gets triggered.

In my practice, I track all sell stops via my custom data base and spreadsheet. It‘s easy for me do, because I spend a lot of time in front of my computer. If you are traveling a lot, this might be more difficult and pose a problem for you.

There is a solution. Some of my newsletter readers have used a couple of services which, for a subscription fee, will track trailing sell stop points for you and send an e-mail to you or your cell phone if any of them have been triggered. While I have not used these companies myself, you might find it worthwhile to check them out.

Here are their web sites with more information:

Feel free to send me an e-mail and share your experiences.

Mutual Fund Companies: Talking out of Both Sides of their Mouths

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When you have been dealing with No Load Mutual funds as long as I have, there is bound to be a run-in with a fund manager regarding investment philosophy.

This happened a couple of times over the past 2 years with the end result that my advisory firm was banned from placing trades with that particular fund family — forever, I suppose. Not that I was all broken up over it, but the reasoning left a bad taste in my mouth.

Here’s about how the phone conversation with the fund company (FC) went:

FC: “We noticed that you bought one of our mutual funds and sold it again within 60 days.”

Me: “That’s correct.”

FC: “We don’t allow that. We want advisors to invest with us for the long term. Don’t you do asset allocation?”

Me: “Yes I do. I generally invest for the long term, but the markets pulled back sharply and, to protect my clients’ portfolios from further damage, I moved to cash.”

FC: “We don’t allow that, you’re not supposed to time the market.”

Me: “Let me ask you, what is this fund’s Annual Holdings Turnover?”

FC: “Let’s see, this fund has an annual turnover of 140%.”

Me: “So, that means you pick your stocks and, if they don’t perform, or economic circumstances change, you sell them and buy others. By the end of the year, you have a turnover of some 140%. Is that correct?”

FC: “Yes, that’s right.”

Me: “Then, why don’t you pick the appropriate stocks in the first place? I am sure, that type of frequent in-and-out trading increases costs for your shareholders?”

FC: “Ah…well…you know, that’s not how it works. Things may change, or a stock heads south, and we need to adjust to increase our performance.”

Me: “That makes sense. Then why am I not allowed to do the same thing? If the markets change, I should have the right to liquidate positions, just like you do, to protect my clients’ assets or increase performance. I noticed that, during the last bear market, this fund went down some 40%. If we head in this direction again, shouldn’t my clients’ interests be priority?”

FC: “Hmm, no…yes, but our policy doesn’t allow that. We need to ban you from further trading with our firm.”

Me: “That’s your loss and not mine. Go ahead — ban away.”

That’s the prevailing attitude among most fund families. Their interests rule and yours don’t really matter.

If this type of thinking continues, more and more investors will eventually realize this and move their accounts. Guess where the assets will go?

Into ETFs, of course!

Mutual Fund Investing: You can’t Win ‘em All

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The media was at it again analyzing the great fund performance record of fund manager’s Bill Miller’s Legg Mason Value Trust. They did it in all fairness (this time) by giving credit to his great 15-year performance, during which he prevailed over the S+P 500 every year.

In fact, his fund showed an average annual rate of 15.8% vs. the S+Ps 11.9%.

This year, he wasn’t able to match his past record and his fund gained only +6.7%. However, keep in mind that this doesn’t tell the whole story. Take a look at the chart below. It shows a 5-year price history of Miller’s Legg Mason Value fund:

As you can see, during the bear market of 2000 to 2003 (red arrow), this fund dropped just as much as any other, from a high of some $60 to a low of around $40, before rebounding in 2003.

So, before you run out and place your buy order, keep in mind that, no matter which equity fund you chose, they will all go down in a bear market. An appropriate exit strategy, with trailing stop loss points, is the best insurance against jeopardizing your portfolio.