Who says the stock market is too cheap?

Sheldon has written a brilliant article. Any level investor should read this article and take it too heart. Bravo Sheldon, bravo

The average non-millionaire investor doesn't have enough time to fully investigate stocks, so direct investing with mutual fund companies are the best way to go. Why pay a broker? And then look at the returns - who cares if one fund has higher expenses than another one if the fund with the higher expenses nets you a higher return.

Dan,

Superior performance can be a fleeting thing...here for a year, or two.....then gone. Fees are "forever"...how often does one read about a fund lowering fees? I'm actually a bit ambivalent about funds. Because of the explosion of funds, and their "kissin' cousins", ETFs, the amout of "due diligence" needed to pick out a good fund approaches that of ol' fashioned stock picking.

Jan

MR. LIBER...YOU DON'T KNOW WHAT THE HELL END IS UP...SOUNDS LIKE YOU HAD A COLUMN TO DO AND WANTED TO PLAY CONTRARIAN....THATS OK IF YOU'RE BUYING OR SELLING FOR YOURSELF....BUT IN THE WORLD OF FINANCIAL COUNSELING, IT IS DISINGENUOUS AND MORE SPECIFICALLY...BULL SHIT!

Jan,
Fees are also forever if you have a brokerage account, whether it be commissions or a fee based on your portfolio balance. And if you have mutual funds in a brokerage account, you pay a fee to the broker on top of the fee to the fund company. Stick with direct accounts with established companies (Franklin Templeton, etc) & funds with good track records that have been established by the current managers. You get instant diversification without investigating 500 stocks. If you own 10 funds with differant objectives, you may own a piece of a few thousand stocks. "Due diligence" on funds certainly take much less time than on the stocks involved. Of course someone with a knack for picking stocks at the right time & who has unlimited time for investigating could do better than a good mutual fund management team. But how many investors meet this bill?

"Stocks are the cheapest they have been in 16 years" reminds me of the cover of Time magazine that had the house on it with the dollar signs...when was that?, right before the bubble burst in the housing market. There are many shoes out there that could drop this market like a rock, due diligence is needed.

Dan,

You are right the average investor should be in mutual funds not stocks. Even with all the research and experience that goes into my picks, I still invest 50% in low cost funds. That is where we disagree. I use Vanguard and Fidelity index funds and no more than three in a portfolio and keep fees to a minimum.

Tony,

Thanks for your comments, but you should temper your anger and re-read. I did not say it was a bad time to invest, I said there were still bargains. I said be selective and do not follow the hype in the market from people who make a living on fees, commissions, trading and deals. I said don't be a sheep. However, if you are one of the hypesters or you are stretched on leverage than I understand your angst; I understand I am trimming your action. You in particular should be cautious - Good luck!