What’s a girl to do?

Drama. On occasion, we’ve noted that “mutual funds” are not an investment. They are a “product” and something that we can buy with the same discretion that we apply to other “consumer products” that have guarantees, warranties, and “best before dates”, all of which are regulated, but none of which apply to “mutual funds”, which are aggressively marketed by trusted individuals and institutions, such as our banks, in more varieties than consumer soap and toothpaste, but provide no information absent “past performance” of a nominal “investment strategy” and the assurance, by prospectus, that past performance is not a guarantee of future performance, and there’s nothing that we can do about it.

The mutual fund giant, T. Rowe Price Group, which offers at least fifty different kinds of mutual funds for “saving, investment, and retirement” to hopeful savers and would-be investors, and has more than $600 billion of other peoples’ money in its funds, has taken “customer service” to a whole new level and unexplored territory, by banning certain types of trades related (at their discretion) to “collective trading” in its mutual funds (Reuters, August 26, 2013, Exclusive: T. Rowe bans some American Airlines employees from fund trading).

We understand the rationale, of course. If a popular investment journal or article effuses or recommends one of their plans, there might be a sudden flow of new cash into that plan – thank you very much, a wise decision, they say – but then reverses its opinion a few months later, there might also be a sudden outflow of cash from the plan, possibly corrupting the manager’s strategy and giving a negative effect to the “returns” and other investors in the plan.

We changed our minds, again.

It would be akin to regularly buying boxes of soap, then ordering a warehouse full, but refusing to take delivery because of “new information” and we want our money back.

In our opinion, it would be a better policy not to take the “surprise” funds in the first place, a practice common to the much maligned hedge funds (which often refuse new investors), and respect the fact that mutual funds are a consumer product and not intended to accept warehouses full of money of uncertain pedigree destined for an uncertain outcome.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™“
Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.