Funds

There are funds, and there are funds. Funds, funds, everywhere, and not a drop to drink.

Well, there are plenty of drops to drink. But which ones are safe to “drink?” Caveat emptor!

You see that a lot. Caveat emptor. What on earth does it mean? As you might have guessed, it’s Latin. Writers often throw in Latin phrases to pretend that they know what they are saying, usually when they haven’t a clue. Caveat means “may he beware,” a subjunctive form of cavere, “to beware.” Emptor means “buyer.” So caveat emptor, or let the buyer beware. Which brings up a question: why didn’t those guys just speak English? It would have saved high school students today a lot of grief. But then, who studies Latin these days? Not even the folks in Latin America.

Getting back to the point. Which one has to do eventually, sadly. I think straying from the point is far more fun. But that’s just me.

We were talking about funds. So many of them. I often think that the reason so many funds exist is just to confuse investors and make them completely dependent on investment advisors. Who speak a language completely foreign to most of us.

“What are your investment goals? What is your risk tolerance?” Well, my goal is to lose a whole bunch of money, while paying you tons of fees. What do they think our investment goals are?

Risk tolerance? Well, let me see. I would like zero risk. But I do drive a car. And, no, I don’t bungee jump. Nor do I list wrestling with tigers as my favorite hobby. So what do you think? And, before I forget, I hate losing money. Don’t you?

So coming back to funds. Which we must, because that’s what we promised. And a man’s word is his bond. By the way, what about a woman’s word? That must be a stock. Ha ha, very funny.

Funds are of many types. You can have money market funds, equity funds, fixed income funds, balanced funds, specialty funds, fund-of-funds, and the list goes on.

Balanced funds? As opposed to what? Unbalanced funds? Wobbly funds? About-to-fall funds? Are we even talking the same language here? Folks, not all of us have degrees in economics. Mutual funds. What is so mutual about them? If I don’t have money invested in them, they are not mutual, the way I understand mutual. They are just yours. Nothing to do with me.

I like fixed income funds. I would love to have an income which is fixed at about a quarter million yearly for the rest of my life. No can do? I didn’t think so.

So how do you decide where to put your money? Without paying an arm and a leg in fees to advisors, who also ask you questions which can only be answered either facetiously, or at great length, using up time which will cost you money. “What are my goals? Well, I would like to have a roof over my head when I retire, and preferably another roof near the beach, as well as one on some exotic island. Perhaps one in the Swiss mountains, too, if it’s not too much trouble …” See what I mean?

Like it or not, we have funds. In 2018, there were 9,599 mutual funds in the USA, managing assets worth about $17.71 trillion. I recently learned about “market neutral funds.” These funds attempt to eliminate the risks of the market by holding half their assets in long positions in stocks, and the rest in short positions. Simple. We won’t discuss how long is long, and what is a position.

Eliminate risks of the market? Good luck! There are about 50 of these funds, and their returns were anywhere from plus 12.57% to minus 16.5%.

What gives? A professor from the University of Texas at Arlington feels that on average, when there is a lot of active management, the performance tends to … go down.

Folks, I think it’s time for me to come out of retirement and start a fund. Just send me your money. I promise you I won’t manage it at all. At least, not actively.