A primary reason for discounts is a lack of sponsorship. If a securities salesperson (dependent on commissions) has a choice of selling someone an existing closed-end fund (say at a regular stock commission of around 1 percent) or a load mutual fund with a sales charge (that can be as much as 8 percent), the incentive is to direct “investors” to the open-end fund.
The incentives associated with higher sales charges can be easily observed when new closed-end funds are issued. In new issues, compensation is by underwriting fees. A typical fee is 7 to 8 percent. If a fund was coming public at $10 per share, an 8-percent underwriting fee would be 80 cents per share. Read the rest of this entry »
You need to be concerned with the psychological aspects of investing in a managed futures program from two distinct points of view. First, what type of investment best meets your needs? And second, if you’re going to personally interview and select a CTA, what psychological characteristics should you be looking for?
The type of futures investment you are suited for depends on your attitude toward risk. If you are an aggressive risk-taker, you might be looking for an emerging CTA with a short, but incredible, track record. A moderate risk-taker might select a seasoned trader with a five- to ten-year track record in the moderate volatility range. Safety-conscious investors prefer to define their maximum risk in advance. They look for limited partnerships and “guaranteed” funds. We’ll have a discussion of the various types of offerings later in this text. Read the rest of this entry »
Lazy and indifferent investors need to force themselves to pay attention to their investments. If they just tell themselves that they’ll try and pay more attention, they are likely to fail. Typically, a slothful investor will experience an investing loss and vow to pay more attention and become more diligent. He may even make an effort to do so for a while, but the odds are that he’ll slip back into his old behaviors if his investments return to their normal performance. Investing laziness is a habit that’s tough to break, which is why my recommendation is to establish a new routine.
Here are the behaviors that you should incorporate into this routine:
1. SET UP AN E-MAIL ALERT
If you are managing your money yourself and buying individual stocks, this e-mail alert will automatically and regularly provide you with the earnings release of the companies you own. I monitor my personal holdings through a Yahoo! Finance page that tracks all my stocks and allows me to view headlines and news stories from the Wall Street Journal, Dow Jones, and other financial publications. Read the rest of this entry »
