From: shag@aero.org (Robert M. Unverzagt)
Newsgroups: misc.invest
Subject: Re: Morningstar
Date: 6 Jan 1993 15:45:22 GMT
Organization: Organization?  You must be kidding.
Distribution: na
NNTP-Posting-Host: aerospace.aero.org

In article <1idm71INN604@usenet.INS.CWRU.Edu> jxs18@po.CWRU.Edu (Jerry Sy) writes:
> In a previous article, shag@aero.org (Robert M. Unverzagt) says:
> >In article <1icgbtINN936@usenet.INS.CWRU.Edu> jxs18@po.CWRU.Edu (Jerry Sy) writes:
> >> I have read nothing but good comments about Morningstar here in
> >> misc.invest.  and I have no doubt that it does a good job.
> >> 
> >> but should one be concerned because the fund review you are reading
> >> can be up to 2 months  (actually 18-20 weeks old) old ? and a lot of
> >> things could have happened during that time ?
> >
> >If you're not in for the long haul, you'd probably want some
> >"hot fund".  Of course, todays hot fund could be tomorrow's
> >dog -- the name of the fund escapes me (Mathers, maybe?), but
> >a short while ago it was the one year return leader, and the
> >next it was a dog -- the manager's high cash position helped
> >him one year, and hurt him the next.
> >
> >If up-to-the-day Morningstar data helps you pick the fund, you
> >probably don't want a mutual fund anyway -- pick your own
> >stocks!  If a change in the second decimal place will determine
> >if you invest or not, you have a pretty fine tuned system.
> >
> but the point is that if say a bond fund has great record, but interest
> is beginning to rise, would you still buy the fund based on a good 3 month,
> 6 month record ? that's why I question the currentness of the information
> in Morningstar.  
> 
> Its like you are saying since this fund performed well in the past 10 years,
> then I should go ahead and invest.  But I'd rather go with the logic of,
> although the fund performs well, why put my money in when the fund is
> experiencing a decline (like flushing your money down the toilet).  and
> instead put the money someplace where it will be safe before putting
> it in the fund later on when it is a good time so that you will have a
> good start.
> 
> comments ?
> 
Sure.  I guess I should have been a little more specific;
I was thinking of equity funds, but that's kind of beside
the point (see below).

Also, don't take my post as implying that you shouldn't do
your homework -- my point was that you can take things a
little too far.  Making an investment decision _for_the_long_haul_
based on Fund A having a return of 15.6% and Fund B returning
15.7% seems like overkill to me, as does wanting up-to-the-
minute data.  (The phrase, "polishing cannonballs" comes to mind.)

I was assuming that "your homework" has already included the
decision of what type of fund to invest in.  As Jerry points out,
if you think that interest rates are going to rise, it seems
foolhardy to go with a bond fund.  Also, you may want to reduce
risk to some degree, so you wouldn't go with an "aggressive 
growth" fund.  If you've already reached the stage of looking
in Morningstar, I had assumed you'd already made such a decision.
Jerry stated in his original post that Morningstar "does a good
job" -- I agree.  But their job is to rate funds _in_their_
investment_category.  Their job is _not_ to make a decision for
you, but give you data to make a decision.  Other data (such as
the interest rate example above) has to be folded in also.

Shag

-- 
       Rob Unverzagt        |
  shag@aerospace.aero.org   |   The will to a system is a lack of integrity.
unverzagt@courier2.aero.org |                        - Friedrich Nietzsche 
   18348@rhodes.aero.org    |