The stock market boom of the 1980s, the proliferation of 401(k) plans and the mass use of mutual funds so greatly increased the number of Americans who own equities that a new demographic term was born: the investor class.
I believe there is no way the counter-class made up of regulators, watchdogs and do-gooders and hack columnists can match wits with the predator class. Today's piles of money are so huge, great fortunes can be amassed by swiping the tiniest of slices in the wiliest of ways long before picked pockets are discovered.
The majority for the riches of the techno-boomers and baby billionaires was way more than many titans of less glamorous industries could bear and in virtually all companies executive salaries soared beyond all proportions of the post-war era. And in many of those executive suites, greed morphed into felony -- Tyco, Enron, Rite-Aid, Adelphia, Global Crossing, WorldCom, ImClone, Lucent, KMart, MicroStrategy, Qwest Communications. And then scandals at the supposed auditors, like Arthur Andersen, insulted the injury.
So now we'll be told that the market, smarter than any deliberately organized system, will correct this. After all, who would invest in a known corrupt game? No one, so the market will make fix it. Plus, the regulators are on the case.
This time, I don't buy it. The predator class will not be exterminated by cease and desist orders, Senate hearings, independent boards of directors and the invisible hand. It's a culture. And essentially, it's our culture. Over the last several years, headlines in the business press proclaimed the coming demise of the mutual fund industry. The fees were too high, flexibility too low and shareholders had too little control over the tax consequences in traditional open-ended mutual funds. Exchange-traded funds (ETFs), hedge funds and separate accounts (which give investors direct access to money managers) were sounding the death knell for the 80-year-old mutual fund industry.
For most financial advisors, ETFs and separate accounts, where planners place money directly with asset managers, live side by side with mutual funds. Quest Capital uses mutual funds for clients in tax-free or tax-deferred accounts and for smaller clients. Benjamin Tobias, CPA, CFP, CIMA, of Tobias Financial Advisors in Ft. Lauderdale, Florida, is wildly enthusiastic about ETFs. From nothing just three years ago, Tobias now has 35% of client assets in ETFs. But there are instances in which he doesn't use the new products
Open-ended mutual funds still are around because they continue to serve investors' needs for diversification and professional investment management. They are growing because they can adapt to demands for improved products and because of newer, more sophisticated analytical tools available to the CPA/financial planners who recommend these funds. The new tools not only give investors a chance at better long-term performance, they also provide CPAs with an edge in using this investment product.
Congress is considering legislation that would eliminate the need for mutual funds to distribute capital gains annually. Shareholders would instead pay taxes on gains when they redeem their shares. And the SEC has issued new regulations requiring accuracy in fund naming--a fund must invest 80% of its assets in its namesake.
Before you can plan a mutual fund strategy, you need to have a clear picture in your mind of your goals as an investor. You also need to determine the amount of time you have to reach those goals. Investing is time-sensitive, so you will always need to factor time into any investing strategy.
Glenda D. Kemple, CPA, CFP, principal and co-founder of Quest Capital Management, lauds Kunhardt's work in keeping her and the firm's other planners up-to-date on changes and new trends in mutual fund analysis. She emphasizes that these improvements haven't varied the firm's central focus. "We use quality fund families, look for consistent performance, long manager tenure and to minimize style drift," she adds.
I believe there is no way the counter-class made up of regulators, watchdogs and do-gooders and hack columnists can match wits with the predator class. Today's piles of money are so huge, great fortunes can be amassed by swiping the tiniest of slices in the wiliest of ways long before picked pockets are discovered.
The majority for the riches of the techno-boomers and baby billionaires was way more than many titans of less glamorous industries could bear and in virtually all companies executive salaries soared beyond all proportions of the post-war era. And in many of those executive suites, greed morphed into felony -- Tyco, Enron, Rite-Aid, Adelphia, Global Crossing, WorldCom, ImClone, Lucent, KMart, MicroStrategy, Qwest Communications. And then scandals at the supposed auditors, like Arthur Andersen, insulted the injury.
So now we'll be told that the market, smarter than any deliberately organized system, will correct this. After all, who would invest in a known corrupt game? No one, so the market will make fix it. Plus, the regulators are on the case.
This time, I don't buy it. The predator class will not be exterminated by cease and desist orders, Senate hearings, independent boards of directors and the invisible hand. It's a culture. And essentially, it's our culture. Over the last several years, headlines in the business press proclaimed the coming demise of the mutual fund industry. The fees were too high, flexibility too low and shareholders had too little control over the tax consequences in traditional open-ended mutual funds. Exchange-traded funds (ETFs), hedge funds and separate accounts (which give investors direct access to money managers) were sounding the death knell for the 80-year-old mutual fund industry.
For most financial advisors, ETFs and separate accounts, where planners place money directly with asset managers, live side by side with mutual funds. Quest Capital uses mutual funds for clients in tax-free or tax-deferred accounts and for smaller clients. Benjamin Tobias, CPA, CFP, CIMA, of Tobias Financial Advisors in Ft. Lauderdale, Florida, is wildly enthusiastic about ETFs. From nothing just three years ago, Tobias now has 35% of client assets in ETFs. But there are instances in which he doesn't use the new products
Open-ended mutual funds still are around because they continue to serve investors' needs for diversification and professional investment management. They are growing because they can adapt to demands for improved products and because of newer, more sophisticated analytical tools available to the CPA/financial planners who recommend these funds. The new tools not only give investors a chance at better long-term performance, they also provide CPAs with an edge in using this investment product.
Congress is considering legislation that would eliminate the need for mutual funds to distribute capital gains annually. Shareholders would instead pay taxes on gains when they redeem their shares. And the SEC has issued new regulations requiring accuracy in fund naming--a fund must invest 80% of its assets in its namesake.
Before you can plan a mutual fund strategy, you need to have a clear picture in your mind of your goals as an investor. You also need to determine the amount of time you have to reach those goals. Investing is time-sensitive, so you will always need to factor time into any investing strategy.
Glenda D. Kemple, CPA, CFP, principal and co-founder of Quest Capital Management, lauds Kunhardt's work in keeping her and the firm's other planners up-to-date on changes and new trends in mutual fund analysis. She emphasizes that these improvements haven't varied the firm's central focus. "We use quality fund families, look for consistent performance, long manager tenure and to minimize style drift," she adds.
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