Story No. 4:Who Needs Stocks?
In story number 4, Who Needs Stocks," Schurr points out that "it's a lot harder to pick an individual stock than pick a diversified blend of stellar mutual funds." He suggests that if you insist on picking stocks, do so with only a small percentage of your portfolio assets.
He also quotes Peter Lynch of Fidelity Magellan fame who wrote, "Stop listening to professionals ... [ignore] the hot tips, the recommendations of brokerage houses, and the latest "can't miss" suggestion from your favorite newsletter-in favor of your own research."
Story No. 5:
To Be or Not to Be the Market: Indexing vs. Active Management!
Story number 5 is titled, "To Be or Not to Be the Market: Indexing vs. Active Management." Schurr states, "Wall Street is not Lake Wobegon. [Lake Wobegon is a town consisting of only above average children.]
We can't all get above average returns. In fact, the surest way over the past 30 years to get above average returns is by investing in funds that mirror the major indexes: Index funds."
He cites Professor Burton Malkiel, and the newest edition of his legendary book, "A Random Walk Down Wall Street," that provides shocking confirmation of the benefits of index investing.
An investor who put $10,000 in an S&P Index fund in 1969 would have a portfolio of $327,000 by the end of 2002, assuming dividends were reinvested.
A second investor who put $10,000 in the average actively managed mutual fund would have a portfolio worth $213,000-50% less.
Story No. 6:
The Other Side of the Coin: Expenses and Taxes!
In story number 6, "The Other Side of the Coin: Expenses and Taxes," Schurr maintains that most investors don't pay much attention to expenses, taxes, and fees when they invest.
One example shows that "Investor No. 1, invests $100,000 in a portfolio of index funds with an expense ratio of 0.22%. This portfolio returns 10% a year over 10 years.
Investor No. 2 invests the same money in actively managed funds with an expense ratio of 1.53%. This portfolio also returns 10% a year over 10 years.
After 10 years, Investor No. 1 has $252,724. Investor No. 2 has $222,314. The difference-$31,410 or 14%.
And that's assuming investor No. 2 finds actively managed managers that keep up with the market indexes!"
Story No. 7:
Do You Need Help?
In the last story, Schurr asks, "Do You Need Help?" Schurr's opinion about seeking professional advice is interesting and controversial. (Many in the financial community who provide professional advice will also condemn it.)
He states, "I am a firm believer in do-it-yourself investing-no professional has as much incentive to safely steward your portfolio as you do.
The Internet, the local bookstore, and a few hours of research a month is all most investors need to build a balanced, diversified portfolio."
Can the use of the advice above, based on the number seven, produce magical results?
As much so as the following test you can take for yourself. Using a calculator, enter your personal lucky number (although any number will do), providing it is not divisible by the magical number seven.
Divide your number choice by (what else?) seven.
Total the first six digits after the decimal point.
Do this calculation without looking at the headline above. Without knowing the number you chose, the answer is magically provided in the above headline's ending number!
