What's New

December 2005 performance review

01/18/06 - Powerfund Portfolios Performance Review

The Conservative portfolio put in a decent 4.14% showing in '05 – about half of 2004’s 9.35% return, but then the stock market returned more than twice as much in 2004 as well.

Flippant

01/02/06 - Powerfund Portfolios Feature Article

Flipping is more commonly known as an inverted yield curve. In such a rare event, the yield on a 10-year government bond is lower than the yield on, say, a 2-year government bond (technically a note). What’s the big deal? Maybe nothing. Maybe something. Maybe a big something.

November 2005 performance review

12/16/05 - Powerfund Portfolios Performance Review

Stocks rocketed, but bonds were merely ho-hum in November. The Conservative portfolio rose 0.82% for the month. The S&P500 rose 3.78% while the Lehman Brothers Aggregate Bond Index rose just 0.44%. Smaller-cap stocks were hot, and tech hotter still – areas safe portfolios are light on.

Ask MAX: Gold or Silver

12/08/05 - Ask MAX

Wendell from Florida Asks:

I hear a lot about buying gold, but what about silver? Is it a better buy and will it appreciate more quickly?

Gold gets most of the precious metals investing attention because gold bugs and other crazed anti-central bank fanatics think that gold is money, not a mere commodity like silver or platinum. Get these quacks going on about the good ole’ days and they will wax poetic about how unstable the world has become since we got off the gold standard — ignoring the 13-fold increase in stock prices and explosive growth in the economy that has happened since Nixon put the gold standard to rest for life (we hope). Meanwhile, gold and silver are still cheaper than they were over twenty years ago.

The Fund Christmas Present You Don’t Want

12/02/05 - Powerfund Portfolios Feature Article

Sure April 15th gets most of the glory, but in the world of mutual funds, tax time is really in December. Why? Because that’s when stock funds typically distribute taxable gains to fund shareholders.

October 2005 performance review

11/16/05 - Powerfund Portfolios Performance Review

The Conservative portfolio fell 1.25% in October as both bonds and stocks were weak. The S&P500 dropped 1.67% while the Lehman Brothers Long Term Treasury Index fell 1.88%. Smaller-cap stocks fared worse, with the Russell 2000 index of smaller stocks down 3.1%.

Ask MAX: Should I sell based on Cramer's warning?

11/03/05 -

Yehuda from Brooklyn asks:

I'm 25 and live in Brooklyn. Jim Cramer said the market is going to crash with the economic news of the last three weeks. Should I sell all my stock funds and buy bonds?"

Take your hands off your keyboard and step away from your E*TRADE account. Jim Cramer is probably wrong, and is definitely not the guy to go to for sound investing advice.

We love watching Cramer's new show as much as the next guy. We love his sixteen-cups-of-coffee delivery, his aggressive-as-a-rabid-Pit Bull stock picks, even the dopey sound effects. 'Mad Money' is unquestionably the liveliest show on the toned-down, post-Enron, post-Nasdaq 5000 CNBC.

But while Cramer is a bright guy with a lot of real world investment experience, his show is first and foremost entertainment. We wouldn't base our investment decisions on Cramer's television rants any more than we would on the advice Uncle Earle gives us at Thanksgiving dinner. Okay, Cramer is probably a safer bet than Uncle Earle, but you should be wary of all famous (and oft-wrong) market prognosticators.

Helicopter Ben

11/03/05 - Powerfund Portfolios Feature Article

Ben Bernanke is not an old Bush chum or just semi-qualified for the job. The stock market did not react badly to the news. Bernanke seems more than deserving of the top job in the entire world of economics. But as I dug a little deeper, I uncovered some details that are a little scary.

September 2005 performance review

10/17/05 - Powerfund Portfolios Performance Review

The Conservative portfolio was essentially flat in September, up just 0.08%. Bonds and stocks flipped once again – bonds fell while stocks went up.

Ask MAX: Should I Invest in a Loaded 401(k)?

10/07/05 - Retirement Planning

Yousef from Idaho asks:

I recently started my first job that has offered a 401(k) plan, and I was very excited to begin investing. The problem is, the funds in the plan are load funds, and after being a fan of your site I know that load funds should be avoided at all costs. Should I invest in my company's loaded 401(k) plan?"

We've reviewed hundreds of 401(k) plans for our Private Management clients and for investors who have used our MAXadvisor 401(k) Planner service. While many of those plans offer funds that normally charge a sales load to investors outside of tax-deferred accounts, the vast majority of those plans waive the regular load charge to people who invest through a 401(k) plan. We've often seen Templeton funds offered without a load charge through company-sponsored retirement plans that would cost investors 5.75% if they bought it at Etrade outside of their 401(k).

There are, however, some very lousy 401(k) plans out there that do, inexplicably, force participants to pay load charges. The dubious rationale behind paying load charges is that some investors need help choosing the funds that are best for them from the ten-thousand plus funds available. How this rationale holds up in a 401(k) plan in which investors have limited choices is beyond us.