Mashed Potatoes vs. Business Investing
Almost all mutual funds own 100-200 stocks and these funds also mostly all own the hottest stocks going. They are all crowded into a handful of very expensive companies that are very popular. These mutual funds are a bowl of mashed potatoes. They are almost all the same and it doesn’t matter how many different mutual funds or styles an investor buys, they’re practically the same stocks. These mutual funds are “diversified” in the same stocks. We ask, are any of them actually diversified if they own all the same stocks? Diversification sounds good, but we found out in 2008’s financial crisis that diversification was just a good sales tactic. It didn’t hold up when inventors needed it to work. Mutual funds own 100-200 stocks, we think it’s absurd to invest your money and ours into the 150th best idea, that’s what these funds are doing.
Even though these popular stocks and mutual funds have had a big run lately, Target 3 has done 35% better than the S&P 500 over the last 20 years. At least 80% of mutual funds don’t beat the S&P 500. What we do works over time. Sooner or later these popular stocks will have problems, it has always happened in the past without exception. When the next bear market comes in the stock market, which it will, we expect to have acceptable results.
Your money invested like our own, be assured we’re partners in every investment.
* Past results are no guarantee of future performance.
** Weekly prices are an estimate, the month end price is precise when the accounting review is complete.
This blog does not constitute an offer to sell, or a recommendation of any security, this update is for informational purposes only.