May 06 2008
comparison of mutual funds in india
» Escrito en Cash Loan Business Tips por writer3 a las 12:31
comparison of mutual funds in india
The S& P 500 stock index closed at an all-time high of 1565.15 on October 9, 2007. By March 10, 2008, the index had dropped over 18%, to close at 1273.37. Since March 10, the S&P 500 has recovered over 7%, to close at 1365.56 on April 17. That’s quite a storm to go through, and it’s probably not over yet.
The reasons for this meandering are many, but probably center around continuing turmoil in the credit markets. The “sub-prime” contagion in the home mortgage industry has spread from mortgage brokers to the near collapse of Bear Stearns in the middle of March. The complete implosion of Bear Stearns, and the likely resulting route in world-wide financial markets, was averted at the last minute (literally) by the Federal Reserve, when it arranged a bail-out by JPMorgan Chase. The Fed has since stepped in with additional systemic assistance, and has indicated its willingness to do so again if needed.
Other reasons for the recent market drop include foreign exchange fluctuations and geo-political concerns. The U.S. dollar has dropped in value against most other currencies by double digits, and is likely to continue that trend. One result is oil at $114 per barrel (good if you pump the oil, but bad if you drive a Hummer). Other commodity prices have kept pace with oil. The U.S. balance of payments deficit, and our continuous exporting of national debt, will keep pressure on the dollar for the foreseeable future.
Is that a light at the end of the tunnel or another train?
When faced with market gyrations like this, many “armchair” investors panic at the low of the market cycle, sell out, and reenter the market at or near the next high. That’s not what we learned in Econ. 101 (remember - buy low and sell high). Our amateur attempts to time the highs and lows of the market can, many times, result in financial disaster.
So, what can the average investor do? Two answers: (1) stay diversified; and (2) take advantage of expert advice.
Diversification is probably the most important attribute to have in an individual portfolio. As an example, while stocks were plummeting this year, gold has risen by over 50% since last summer (although gold has dropped back below $1,000 per ounce in the last few weeks). Although owning gold bullion is cumbersome, a gold proxy can be found in certain stocks, mutual funds and exchange traded funds. Likewise, limiting your portfolio to only U.S. stocks ignores the advantages of being diversified internationally. Also, it is possible to hedge against market downturns by taking advantage of the option markets.
Experts are everywhere (definition of an “expert”: he or she is from out of town and wears a suit). The trick is to find an expert (or company of experts) whom you can trust because of their track record and standing in the industry. Also, the expert needs to be equipped to provide all of the services that you feel are necessary to: (a) protect your investment; and (b) make it grow in a prudent manner.
We will explore these and other investment matters in future issues.
Randall H. Fields
Randall Fields is nationally known speaker, an attorney, a financial advisor, and a registered representative of a large securities brokerage firm. He has extensive experience in contract negotiation, risk management and investment planning. Randall has served as chairman of two nonprofit organizations with assets in excess of a billion dollars, and currently serves as a director of several businesses and charities. He and Nancy, his wife for 35 years, have three children. Rebecca is a graduate student at Exeter College, University of Oxford, Travis is a senior at Texas A&M University, and Elizabeth is a sophomore at Blinn College. Randall and Nancy reside in San Antonio, Texas.
comparison of mutual funds in india
