Mutual Fund Question!

**Scanner** · 03-25-2008, 01:45 PM

You probably mean the S&P 500 - it's short for Standard's and Poor 500, which is essentially 500 Blue Chip companies (Blue Chip = large co.'s like Dell, Microsoft, Shell, Walmart, Tyco, etc.).

A computer picks the 500 stocks to invest in based on "market capitation", which the way I understand. . .that kind of means where all the money is. Whereever the money is or the majority of the money is, those are the 500 the 'puter picks.

So. . .with only a computer managing the money. . .there is no fund manager to pay big bucks so it's expense ratio is like .18% or something ridiculously low.

Some people believe in it so much here, they are trying to tell me that 5.83% over 10 years is a good thing

Seriously, it probably deserves a place in your portfolio. I have my Blue Chip holding in T. Rowe Price Blue Chip Growth as an alternative and I don't think it's beaten that fund, or it's a close tie.

**sweeps** · 03-25-2008, 01:53 PM

The question is who doesn't invest in the Vanguard S&P 500 fund.

Scanner, it's even worse than you think. The current 10-year return is 3.99%.

OP, don't listen to the perma-bears. This fund or the Total Stock Market Index fund should be a core holding in your portfolio. Don't let recent stock performance scare you into making a foolish decision and putting all your money into gold, silver, or cash.

**Broken Arrow** · 03-25-2008, 02:00 PM

Don't let past performances scare you off. Looking at it will give you a wrong impression about taking advantage of the cyclical nature of the market. Now is a great time to get into equities, and a S&P500 fund is a simple way to get started.

**Scanner** · 03-25-2008, 02:12 PM

I was just joking. . .now that the S&P is down. . .yes, now is probably a good time to get in.

Not a good time to get in: 10 years ago. LOL.

**Scanner** · 03-25-2008, 02:19 PM

Aw c'mon, Sweeps/Broken Arrow. . .you guys talk with forked tongue.

You say,

Don't let past performances scare you off. Looking at it will give you a wrong impression about taking advantage of the cyclical nature of the market

but at the same time, you Pundits/Vanguard cultists will say,

"Over the last 20 years, the stock market (of which the S&P has a large play) has returned an average of 8%."

So which is it? You look at historical performacnce? Or you look to the future?

You can't drive forward looking in the rear view mirror.

(unless you are going faster than the speed of light

)

BTW, my silver is back up

- no stop order activated.

**sweeps** · 03-25-2008, 02:24 PM

Don't let recent past performance scare you off.

You've been given a temporary reprieve on your silver investment.

**Scanner** · 03-25-2008, 02:25 PM

Abumhira,

As you can tell, I am a bit of a contrarian so I am not the model to follow, LOL.

**ThriftoRama** · 03-25-2008, 02:37 PM

I own this fund, as well as several other Vanguard funds. I can't recommend Vanguard highly enough.

Here is the link to Vanguard's prospectus for the S&P 500 fund.

Mutual Funds: Investing In a Mutual Fund | Vanguard

https://personal.vanguard.com/us/funds/snapshot?FundId=0040&FundIntExt=INT

Discover mutual funds: pooled assets investing in stocks, bonds, and securities. Build your legacy with high-quality, low-cost mutual funds from Vanguard.

Also, if you want some food for thought on how to build a diversified portfolio using Vanguard funds, I highly recommend "The Lazy Person's Guide to Investing" by Paul Farrell.

He outlines 5 or 6 good Vanguard-based portfolios.

**kork13** · 03-25-2008, 05:19 PM

::sigh:: what really gets me about Vanguard is that most of their MF's that I've looked at with any interest are very unfriendly to the poorly-funded investor... Most of them all require $3k to get into any given fund, and I sadly don't have the financial backing to do that quite yet. So until I do, I have to stick with my bank's more limited (selection-wise) and slightly less performing investment firm... Ah, the woes of the young with a mind on money...

**jIM_Ohio** · 03-25-2008, 05:54 PM

Originally posted by Scanner View Post

You probably mean the S&P 500 - it's short for Standard's and Poor 500, which is essentially 500 Blue Chip companies (Blue Chip = large co.'s like Dell, Microsoft, Shell, Walmart, Tyco, etc.).

A computer picks the 500 stocks to invest in based on "market capitation", which the way I understand. . .that kind of means where all the money is. Whereever the money is or the majority of the money is, those are the 500 the 'puter picks.

So. . .with only a computer managing the money. . .there is no fund manager to pay big bucks so it's expense ratio is like .18% or something ridiculously low.

Some people believe in it so much here, they are trying to tell me that 5.83% over 10 years is a good thing

Seriously, it probably deserves a place in your portfolio. I have my Blue Chip holding in T. Rowe Price Blue Chip Growth as an alternative and I don't think it's beaten that fund, or it's a close tie.

I don't mean to rain on the parade, but a few statements above are false.

which is essentially 500 Blue Chip companies (Blue Chip = large co.'s like Dell, Microsoft, Shell, Walmart, Tyco, etc.).

S&P 500 is the 500 companies identified by standard and poors committee. It is not 499 or 501 companies, it is exactly 500.

A computer picks the 500 stocks to invest in based on "market capitation",

A committee and standard and poors picks the stocks. The stocks are weighted by market cap, but nothing is picked by a computer.

So. . .with only a computer managing the money. . .there is no fund manager to pay big bucks so it's expense ratio is like .18% or something ridiculously low.

There is a fund manager picking things. There are decisions about which lots of shares to sell (if shares are sold) and make some decisions regarding investments.

I would hope the person making the decisions is an accountant of some type and not a computer programmer. There are SEC imlications of the latter.

**jIM_Ohio** · 03-25-2008, 05:56 PM

Originally posted by abumhira View Post

Can anybody tell me about the Vanguard Index 500 Fund? Somebody referenced that its a great fund to invest into it. Does anybody out here own this fund?

Thanks.

Great=average.

If you do not want to do lots of investing homework, you can do a lot worse than an index fund investing in large cap stocks.

There is risk involved. Over time that risk is diminished (time reduces the risks taken). A portion of my retirement is in large cap stocks and I have owned the VFINX Vanguard 500 index fund before (in a 401k). I do not own the fund now.

**Jazzmint98** · 03-25-2008, 06:05 PM

Originally posted by kork13 View Post

::sigh:: what really gets me about Vanguard is that most of their MF's that I've looked at with any interest are very unfriendly to the poorly-funded investor... Most of them all require $3k to get into any given fund, and I sadly don't have the financial backing to do that quite yet. So until I do, I have to stick with my bank's more limited (selection-wise) and slightly less performing investment firm... Ah, the woes of the young with a mind on money...

You may want to look into T Rowe Price MFs. You are able to contribute to them monthly with as little as $50 each by electronic transfer from a bank account, without a minimum initial investment. They also have many good funds. Just a thought....

**jc3900** · 03-25-2008, 06:13 PM

Hey for all of you S&P haters out there. Yes, the fund does return the market but since 1976, the fund has returned 11.6% annually. For a 32 year investment, that is pretty good. Anyway, I do have my problems with just going to the indexes. I am by nature exteremely greedy and know what a difference it can make if you are above the market for a long time. However, people also tell me it is impossible to beat the market in the longterm. So basically I am still confused. Personally, I would probably want to see myself as a scanner like invester, willing to pull the gun on an opportunity when I see it but I just don't know right now. Still, beeing greedy can cause you to fall, so maybe indexes would be good for me.

Oh and actually, if you look at some of vanguards more aggressive funds, they have averaged about 7.5% in the last 10 years if you throw out the capital opportunity fund which has been on a tear at 15%.

**disneysteve** · 03-25-2008, 06:52 PM

Originally posted by jc3900 View Post

Oh and actually, if you look at some of vanguards more aggressive funds, they have averaged about 7.5% in the last 10 years if you throw out the capital opportunity fund which has been on a tear at 15%.

Don't forget my personal favorite, the Vanguard Healthcare fund - 10 year average of 12.24% and 18.13% since 1984. But this is not a "core" holding for one's portfolio. It is a sector fund which is a more speculative type of investment.

I also own the S&P fund and have for many years. About 14% of my portfolio is in there currently. I think it is an ideal core holding. Broad holdings, tax efficient, ultra low expenses.

Mutual Fund Question!