Remember the objective:  financial literacy.  That isn’t wording the illiterate will like.  Growth stock funds.  We’ll get back to the five things.

It is strange to think about how many people are employed by the stock market (and other investments) when all it is is investing in companies.  There are traders, brokers, investment experts, and of course mutual fund managers.

Is it a legitimate business?  There are some sleazy things that go on and regulation isn’t always the answer.  More to the point, everyone has to make a cut and a buck.  But that doesn’t matter so much when you are still coming out ahead–fees should be viewed as included in total return.

Mutual funds do offer a service in that they help people save and they help grow wealth.  Taxable wealth.  Enjoyable wealth.  Inherited wealth.

There is no way almost any investor can do the things mutual funds do given the ease “of use” and low costs.  There is no way.

So yes, there are reasons to say mutual funds are a legitimate business.  They’re profitable, if they’re good, too, and maybe too much so.  They could invest in things you don’t like–Philip Morris or Comcast.

Those are things you don’t want to know.  You don’t want to look to closely.  You can’t control it and you can’t predict it.

Is it a business I wish I’d worked in?  The quantitative analysis and behavior-predicting is fun, as is making money.  I would have gone crazy because you can’t be right all the time; very good to excellent has to be good enough.  Maybe banking…  It is less tense, but it is boring.

While the scrounged-up Bernie videos play in the background, let’s talk about 10% annual returns.  It is boring, and you don’t have to invest with a crook to get them.  It is amazing how consistent it is:

This started because I was curious, have 401k’s and IRAs driven the market up?  With such easy ways to invest and a steady stream of cash, does that prop-up the market and make everybody rich?  No is the simple answer.  Not as many people are saving that way as “one” would hope, but more realistically some people are going to invest in stocks, some are not, and that is not going to change much.

Recently I read something about how the stock market was going to suffer because baby boomers will withdraw and die.  No, not that either.

How does one get a stock market opinion piece published on a major site?  The opinions and wild by-lines–the bull market has 3 more weeks–are all over the place.

Nobody knows and you can’t predict it.  The “soft landing” is mutual fund managers have goals, rationale, targets, and analysis however limiting those may be.  They are much better at it than I am.

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Bonds

Someone asked:  My bond fund is going down.  Why?  Will it recover and go up?

The answer is yes.  The answer provided was long-winded and didn’t answer the question.

Bond prices–comprised of a the document’s specifics and market conditions–go in reverse of yields:  when yields go up the bond is worth less because buyers can get higher interest elsewhere (the market component).  That is in a fund–if you buy a bond and hold it until maturity you get the interest and the whole principal; if you sell it, like in a fund that is constantly changing, it is worth less.  And of course you only get the principal and interest if there are no defaults.