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Gems from "Serious Money"
Taylor Larimore 09-23-2001, 1:23 PM | Post #47707 | 
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Hi Diehards:
I have just completed "Serious Money" by Richard Ferri. Here are some selected passages I would like to share with you:

Turnover rates and Returns of Growth & Income Funds 1984-1998:
...Low turnover funds 15 year return---15.5%
...High turnover funds 15 year return--13.8%

Alan Greenspan: "This decade is strewn with examples of bright people who thought they built a better mousetrap that could consistently extract abnormal returns from financial markets. Some succceed for a time. But while there may occasionally be misconfigurations among market prices that allow abnormal returns, they do not persist."

Warren Buffett: I am certainly not going to predict what general business or the stock market are going to do in the next year or two, since I don't have the faintest idea." (1963 Letter to Partners)

In 1994 Morningstar conducted a cash flow study of all US growth funds. They included 219 funds in the study and covered a five-yuear period between 1989 and 1994. The purpose was to compare the return of the growth fund category with the actual profits made my investors in the funds. The average growth fund earned an annual return of 12.5%. The average investor in those funds lost 2.2%.

Performance results of recommended stocks in Money magazines Annual Forecast Issue:
YEAR--RETURN--S&P500
1990-----(-16%)----(-03%)
1991------+38%------+31%
1992-----(-13%)-----+07%
1993-----(-06%)-----+10%
1994------+02%------+01%
Cumulative(-04%)----+52%

Percent of Large-Cap funds that beat the Vanguard 500 over different periods of time:
05-year periods----33%
10 year periods----20%
20 year periods----07%

"Investing for retirement can be simple, profitable, and tax efficient. By ignoring Wall Street hype and investing in a sound portfolio using market-matching strategies, you have a greater likelihood of achieving long-term success. It is the markets that make us wealthy, not complex strategies designed to beat them." Rick Ferri, CFA

I hope you find these excerpts interesting and helpful. Best wishes.
Taylor

Originally posted in thread: 14220
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