From the January, 2000 Smart Money Magazine:
“The Underachiever’s Club – Thanks for Nothing: Sixteen mutual funds reopened to new investors in 1999. But returns for these three make you wonder why they bothered.”
The three mutual funds highlighted in the “Underachiever’s Club” were:
- Lord Abbett Small-Cap Value
- Neuberger Berman Genesis
- Vanguard Windsor
The article focused on each fund’s market underperformance since reopening – a period of only six months! Six months is hardly enough time to judge an investment or investment strategy.
Of course, it’s easy to find winners and losers using hindsight. The problem was, this article highlighted these funds as losers although they were on the verge of outperformance.
Look at the subsequent five-year (2000-2005) compound returns for each of the “underachievers” versus the general market.
- Lord Abbett Small-Cap Value: 17.05%
- Neuberger Berman Genesis: 17.44%
- Vanguard Windsor: 7.62%
- S&P 500: -1.13%
Investing based on tips from the financial media is dangerous to your wealth and will not help achieve your goals.
Finding an advisor you trust and developing a plan with that advisor will!
*This article does not represent a recommendation to buy or sell the mentioned funds. Past performance does not guarantee future results!
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An interesting post. One thing to consider is that the purpose of media financial news is to sell commercials/advertisements and not to provide the best advice possible, there are some exceptions but especially for television it is a good rule. I recall an occasion where they were pointing out some financial news on television and made out the whole thing to be a big tragedy when in fact it was actually good news for the long term health of the company.