Tag: mutual-fund

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401k and Personal Finance Business Investing

All the math we need for trading stocks

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A fun math problem suitable for a confident 4th grader

I went to my 9 year old (4th grader)’s class recently and tried to talk about the “The Stock Market Game” (btw, it looks like my main winner is Nike for now 🙂 Below is something I shared in my daughter’s class.

I also tried to answer some questions on individual stocks too, e.g., Adobe, Chipotle, Peabody Energies (do they still have the same name after emerging from bankruptcy, btw).

All the math you need in the stock market you get in the fourth grade.

— Peter Lynch (famous mutual fund manager in the US)

Warren Buffett said something similar (only need 4th-grade math for stocks) in the 2022 Berkshire Hathaway Shareholder meeting, at about 1 hour 40 minutes mark, morning session (available on Apple Podcast and YouTube)

Warren Buffett bought his 1st stock at the age of 11: 1 minute 28 seconds in the video till 2 min 27 sec . I think he is probably in grade 6 or 7 (he may have skipped grade when he was young).

Mutual Fund (this came up as a question and I prepared a bit)

Illustration of mutual fund

Articles from nerdwallet on Mutual fund


It’s hard to look up Mutual Funds in the Stock Market Game website (app), btw.

VFIAX – VFIAX-Vanguard 500 Index Fund Admiral Shares

I created a notes before I go, and here is the google docs link (you can view it).

PS: 4th grade math on Kahn Academy

(Update 11-10-2023) A coworker recommended the Netflix series below, on personal finance etc. I watched a bit, and I think this is good.

Below is a screenshot, if you are in the free world, you will likely see 2 similar images (to be precise, one is Tweet, the below one is an image)

I think this Netflix documentary series maybe suitable for the kids 4th graders and up 🙂
Categories
401k and Personal Finance

Best mutual fund and shareholder return

Reading Time: 2 minutesIt’s that time again, the end of 2009 (and the decade of 2000s) means we can also look at the performance of mutual funds in past year/decade. The winner of US based mutual fund is CGM Focus fund, managed by Mr. Heebner, the fund’s manager since its 1997 launch. CGM Focus is a large cap growth fund with annualized total return of 18.2% in last 10 years (source: WSJ, Best Stock Fund of the the Decade: CGM Focus). Sounds pretty good, right?

Not really. According to MorningStar in the same article:
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Too bad investors weren’t around to enjoy much of those gains. The typical CGM Focus shareholder lost 11% annually in the 10 years ending Nov. 30, according to investment research firm Morningstar Inc.

These investor returns, also known as dollar-weighted returns, incorporate the effect of cash flowing in and out of the fund as shareholders buy and sell. Investor returns can be lower than mutual-fund total returns because shareholders often buy a fund after it has had a strong run and sell as it hits bottom.

……

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Investing

Asset management in China: I

Reading Time: 2 minutesWhen I say a mutual fund manager, what kind of personality (impression) appears in your mind? A guy or a lady in his/her 40s, with financial education, 10 years or more experience in investment field…

This is not the case in China. Due to the boom of China stock market in recent years, and the boom of the hedge fund, many experienced guys (like Danbin, more about Danbin later) started or joined hedge fund so that they could make more money. Here is a Chinese article titled “rookie fund managers in charge of trillons of Yuan, only 7 fund managers have more than 7 years experience in China mutual funds”. The following Chinese video below tells the same problem.

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Fun Stocks

Mission impossible: beat the index

Reading Time: 2 minutesFor the mutual fund, besides being the leader in its category each year, one key performance measure is to beat the bench market index. For instance, if a fund is invested in emerging markets, one key bench mark is MSCI emerging market index (EFM, an ETF tracks this index). For reference, the index is up 33.44% from Dec 21 2006 to Dec 20 2007.

But, beating the index is very hard. Consider Bill Miller, the legendary fund manager of Legg Mason Value Trust, and he is going to underperform the market second year in a row after beating S&P continously for 15 years. Here is a link to the fund details. From the portfolio, Bill hit a home run with Amazon, but he also had dogs like Sprint, Yahoo and to a lesser extent, eBay. The following is Performance of Monthly and Average Annual Total Returns (as of 11/30/07, source: Legg Mason site).

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