An angry rant: don't fall for the mutual fund company propaganda!

I was talking to some friends at work the past few days and continue to hear about how much mistrust and mystery they have about the financial world.

EG:  My friend was proudly talking about her progress with some of the funds she had, and they had appreiciated 15% in the past year.  While some of you might think this is well and good, (and a 15% profit is good) it's a HUGE miss from even the most conservative portion of my holdings.  (excluding the bits I day trade)

Why is a 15% profit bad you ask?  Easy, in the past year the TSX has gone up 25%  (feb 2010 to feb 2011) and the big 5 Canadian banks have gone up 25-35%.  This means her holdings fell BEHIND everything else 10-20%.  This is effectively the same as losing money in the market because your few dollars will now buy less.

The more I think about it, the more I want to bulk up my holdings in the following:
TSE:BNS - Scotiabank
TSE:RY - Royal Bank of Canada
TSE:TD - Toronto Dominian (I don't own this one yet)

Also there are these neat things called index funds.  They have holdings that effectively follow/track/mimic the performance of the indexes they follow.  And index funds are a great thing to have.  The ETF versions are better since they generally have lower management fees and you can bail on them quickly if necessary.

I like the Horizion Beta Pro product that uses Leverage (and a few other tricks) to track the index but at a 2:1 rate.  So if the market goes up 1% you gain 2%.  If it goes DOWN 1% you lose 2%.  Generally speaking though, markets do go up over time if you're in it for the long haul.  (If you examine any 15-20 year brick and look as far back as the stock markets go, you'll find few 20 year periods where you would lose money if you holdings tracked the index)  This one is can be found @ TSE:HXU  You can flip it quickly or hold it for a while.

Just remember: Buy on FEAR, sell on GREED.

If the market falls and the media starts blathering on about how much it's fallen today, then this is your chance to BUY BUY BUY!  But when you see things go up for several days/weeks in a row, it's time to consider selling or reducing your position to take a little profit!

Disclaimer: Don't sue me.  I'm broke.  Follow my advise at your own discretion.  I can't be held responsible for your shoddy research.  My opinions are mine and for me alone so if you lose everything, you fully agree by having read any part of my blog that you won't sue me.  If you're lawyer thinks otherwise, this means you immediately agree to pay me $1,000,000 and pay for any legal expenses I might incur.