Why Trade, if you can buy mutual funds?

Discussion in 'Professional Trading' started by OptionScreen, Dec 15, 2005.

  1. I was looking at MF database few days back (i have no
    experience with MFs), seems to me investing in MF is
    better option than trading my account myself

    few reason:

    1-Seems 60% MF make money in long run 3-5 years, while
    90% traders lose money in long run

    2-With trading you have to play two side of market short/long
    while with mutual funds you buy them only

    3-MF requires very low investment compare to hedge funds,
    and you are in control of you money, you can open and close
    it any moment before determined date for little extra fee

    4-Seems most Mutual funds charge maximum 5% of total
    invested amount, which equals 20% charged by hedge funds
    for the gains, while most profitable Hedge funds are not open
    to public for small investment

    5-easy access to historical performance, and detailed
    background for asset manger in charge of the fund,
    asset turnover, alpha/beta/sharpratio,..risks,...very

    6-More diversification than trading a retail account, and
    less time monitoring needed

    Now, i see many mutual funds are NO-load, No fee, how they
    benefit from you investment, or how they make their money?

    Please tell me if i am missing some points here, like hidden costs, ....as i have never tried them befo invested in Mutual funds before

    Thank you
  2. Pekelo


    This is an advantage, not a negative. Remember 2000-2002??
    For a conservative trader/investor, I would advise trading ETF not more than 10-20 times a year....

    Here is something to backtest. Put your money into ETFs from Oct to Apr, and for the rest of the year into CDs. If you backtest it, you outperform the markets 9 out of 10 times....
  3. Ebo


    RYDEX is considered a "Mutual Fund".
    You are able to be long or short any index, handy in an IRA!
  4. I assume that managers play both short/long side of the market in the funds you own, but you just need to purchase them only

    My question in general (considering above factor or fictions) is
    isn't a trader better of buy hadful of good performing funds rather
    than trading his account?
  5. Ebo


    I have managed assets, as well as "self managed"!
  6. volaray


    There is a very interesting book on trading mutual funds by Al Thomas called "If it doesnt go up dont buy it". I have read the book and still operate one of my accounts as mutual fund trading. I have no connection with the author other than having found the book useful.
  7. Most MF's don't short. They're long *most* of the time.
    If you don't think you can outperform them and you're right that the majority can't do any better, then buy them. Just don't expect to change any minds around here. People here have the sense that "I'm better than the average joe shmoe" and I can trade better too.

    So, if you're into mutual funds, this site won't really be of much use to you.

  8. Point number 1 - 60% of mutual funds make money over 3-5 years.

    I don't know what database you were using, but if it's a list of current mutual funds you probably have a survivor bias in there. I'm sure some funds have gone out of business due to lack of performance in the past 5 years due to underperformance, that would definitely take your % of winners down some.

    Also, there are a handful of mutual funds that short. I use to work for one.
  9. mutual fund timers, sector fund traders and rydex fund timers are quite numerous and I wager have more money under the belt than all ET short term traders and would be ET members compounded and multiplied. So just because you do not see them post and especially on this board do not think they do not exist. Just look at ALL the monies in Fidelity sector funds, Rydex, Profunds!!!
  10. I was thinking about doing that, but as i trader i always had little or no time for self education, coming up with new ideas, have little more personal freedom , because always busy trading

    I need the answer, "SELF MANAGED" vs "MUTUAL FUND"
    Which i better if you had to select one only?
    #10     Dec 15, 2005