I think one of the main reasons that actively managed mutual funds (or any mutual fund for that matter) underperform is because fund managers are forced to buy high and sell low. People buy mutual funds because they feel that they do not understand investing well enough to do it on their own. However, they then proceed to second guess the fund manager.
They pile in money when the stock market is going up and they pile out of the fund when the stock market is going down. How dumb is this. The other equally dumb thing they do if they have not sold their mutual fund when the market is going down, they sell when the market has recovered to the point they entered the fund. That is if they put in $2,000 in a mutual fund they wait until their mutual fund value is back to $2,000 to sell.
This is one reason I do not like mutual funds. Good mutual funds for high value clients often insist that their clients do not behave this way.
On my other blog I wrote yesterday about Canadian Natural Resources (TSX-CNQ, NYSE-CNQ)... learn more. Tomorrow, I will write about Veresen Inc. (TSX-VSN, OTC-FCGYF)... learn more on April 27, 2016 date around 5 pm.
Also, on my book blog I have put a review of the book The Rise and Fall of American Growth by Robert J. Gordon learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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