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by Investing School on January 26, 2009

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elementaryfinance January 26, 2009 at 4:02 pm

Great article. One thing to mention as a disadvantage, often times there is some overlap when you have different kinds of funds. These overlaps can cause redundancy in your portfolio or even worse, positions to work against eachother. I guess a positive spin on that could be that you’re hedging but it would be a very bad hedging strategy.

apouky May 14, 2009 at 11:15 am

The notion of the 10-12 well selected assets is well documented. It leaves one to wonder if it only takes a relative handful to diversify away most risk except systemic why would a mutual fund hold so many assets (assuming it is not an index fund)?

Arthur Regen November 14, 2009 at 4:21 am

Question: Why is there such a disparity between the net real returns of 8-9% produced by our Mutual Fund Winners Spreadsheet (MFWS) since 1994 compared to the average investor’s net real returns of 1-2% after fees, expenses, taxes and inflation?

Rather than bemoan this sad state of affairs and since it is unrealistic to expect expenses, taxes and inflation to be drastically reduced any time soon, the investigation’s approach was to find out what controllable factor(s) are responsible for this corrosive drag on performance.

Since fees are controllable, the MFWS is confined only to no-load funds. These funds have no fees and, therefore, incur no additional acquisition costs giving the fund investor an initial, but limited, boost in returns. While this was a valuable contribution to justify a healthy subscription fee, the investigation was not satisfied and probed further and deeper into the problem.

After 15 years of research using over 200 million data cells and some luck, we found the culprit. It was adverse selection, which is the systematic selection of more losers than winners usually on a 75:25 ratio basis. By reversing these odds, scientifically, many times more winners than losers are now easily and consistently picked.

A winner is defined as a fund whose performance consistently outperforms the Standard & Poor’s 500 Stock Index over time. A loser is defined as a fund whose performance consistently under performs the Standard & Poor’s 500 Stock Index over time.

This strategy has been carefully honed over the last 15 years to produce stellar results. It uses so much mathematics, science and investment experience it would make your head spin. All the work has been done for you. It consistently outperforms the S&P 500. It is easy to use. It works.

The MFWS was designed in 1994 to enable investors with no previous fund investment experience (or with loads of it) to pick winners, to overcome adverse selection, to become successful investors and take control of their financial lives.

These are the scientifically verified facts as opposed to the collection of unsubstantiated anecdotes permeating print, press and the internet that deny investors financial independence.

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