From: jhc@iris.uucp (James H. Coombs)
Subject: Re: 20th Century---the real story
Reply-To: jhc@iris.brown.edu.UUCP (James H. Coombs)
Organization: IRIS - Brown University
Distribution: misc
Date: Mon, 12 Oct 1992 06:34:35 GMT

In article <1992Oct12.014643.16851@samba.oit.unc.edu> Chris.Hynes@bbs.oit.unc.edu (Chris Hynes) writes:

>	1>  Ultra investors was the top performing fund for the five year
>period ending December 1991 with an average annual return of 47%.

Ouch!  AAII says 27.4%, which is superb.  I guess you are not giving
average annual compounded return?  The simple mathematical average is
misleading.

>	2> Growth Investors, one of its oldest funds, is the #1 performing fund
>for the 20-year period ending December 1991.  This is not a twisting of
>the facts, this is true.  For those of you screaming, "What are Fidelity
>Magellan?"  Here are the numbers:  

>	Average anuual return (Dec 1971-Dec 1991)
>		#1:  Growth Investors--20th Century      20.8%
>	        #2:  Magellan Fund--Fidelity             20.2%
>     		#3:  Select Investors--20th Century      19.0%

For *10* years ending *12/31/90*, BusinessWeek's Annual Guide gives
21.3% for Magellan and 11.2% for 20th Century Growth and 15.8% for 20th
Century Select.  I don't have anything on *20* years at hand.  Why has
20th Century's performance gone down so much over the last 10 years (2
market cycles)?  Was their performance really so extraordinary over the
last year that it brought those long-term averages way up?  Or are we
still talking simple vs. compounded average?  And what is the rationale
for looking at 20 years without also looking at the character of the
funds: managers, size, portfolio turnover, percentage of return from
income vs. capital gains, etc.

For *5* years ending *7/1/92* (1 market cycle), Money Magazine puts
20th Century Ultra at #10 for Growth funds with 15.6% average annual
compounded return.  20 Century Growth and Select don't even make the
top 20, which ends at 12.7% average annual compounded return.  The top
for 5 years is Fidelity Advisor Equity-Growth, with 18.2%

Hey, these 20th Century returns are superb, but they do not seem to be
the big winners that you claim.  Where did those figures come from?

>Century takes a long-term view by holding the stocks it deems to be of the
>highest quality, it is subject to tremendous volatility.  The best article

With 100% a year turnover in Ultra, I find it hard to believe that 20th
Century takes a long-term view.  Let's see, Growth also averaged well
over 100% a year until 1991, which was still 69%.  Compare with
Vanguard, which has funds with more like 25% turnover annually (some,
not all).  Vanguard seems to have much more of a long-term view.

Seems again that 20th Century says one thing and does another.  Do they
SAY that they take the long-term view?  Then why the high turnover?
Something is awry here.

>	President James Stowers, Jr. says, "The problem with peoplr is they get
>too darn impatient."

Yeah, like turning over their entire portfolio annually.

>	One person posted news saying he had invested when Ultra was at
>18.40 at the beginning of the year and it was at 14.30 now.  Well, what
>did you expect when buying Ultra after it had gained 101% the previous
>year.  Also, if you had dollar-cost averaged all along, you loss would be
>smaller, you average share price would be more around the level of 16.00 and
>you would be poised to make some real gains.

Dollar cost averaging makes sense.  Not jumping into something that has
just had a big run also makes sense.  But what evidence do we have that
our six months dollar-cost averager would be "poised to make some real
gains"?  The first 12% will be just go to recovering losses, and that
is most of the average annual compounded return for Ultra.

>Century does not lose money just because its investors may be losing
>money. 20th Century will once again post a profit this year, mostly from

Although it should!

>	Another question I need to address.  One reader said that they objected
>to the fact that Ultra had grown so much in recent years and how that was
>going to lead to Ultra becoming a big-company fund.  WRONG!  That just
>means they will have to own more shares of high quality companies.  It's
>simple.

Sure!  Go ahead!  Ignore the fact that (according to Fortune), Ultra is
actually investing in larger companies.  What happened to the small
company fund?  And where are they going to find all of these shares in
high-quality companies?  Gee, do they look at value at all?  Sometimes,
people actually say, "This is high-quality, but it's not worth THAT
price."

>	So, if anyone out there is planning on investing in a company that
>doesn't churn the market or chase down fast fluctuations in the market,
>then 20th Century is the right place for you.  For those of you with a

Doesn't churn the market?  Well, I guess they have a good marketing
machine at least.

>	I sound like a representative for Twentieth Century sometimes.  I
>feel passionately about their investment philosophy, and although I get
>nervous sometimes, I have been very pleased with my results.  I plan on
>staying with 20th Century for years to come.  

You really ought to try investing some money with someone else just to
reduce that blind faith in 20th Century.  There are other good funds
and other good families.  In fact, 20th Century ranks 25th out of 25 as
an overall fund family and only 4th for Growth funds (according to
Money Magazine 8/92).

>I am very concerned about
>the fact that 55% of Americans have zero or negative savings.  I am very
>concerned about the low savings rate of our country as well as our
>national debt.

The national debt is not different from the low savings rate but is
part of the low savings rate.  Family savings is only part and not the
whole that most people think it is.

	Why were savings so low in the 1980s?  There are two main
	reasons.  First, as everyone knows (but some people choose to
	deny), the huge Federal budget deficit meant that the Federal
	government was engaged in massive dis-saving (or negative
	savings); that accounts for about half of the decline in saving
	since the late 1970s.  The other big factor was a sharp decline
	in saving by households; as families reduced their savings and
	loaded up on consumer credit, the personal savings rate fell to
	record lows [Paul Krugman, *The Age of Diminished
	Expectations*, 68].

>I am concerned about educating poor and low income people

You should start reading about these issues then.  You seem to be
relying on marketing propaganda, but you don't even give your sources.

--Jim
jhc@iris.brown.edu -- don't trust reply-to fields
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