Cut losses and move on to something better?

**bjl584** · 02-22-2013, 07:36 AM

Check out their financial profile. Has there been a mass exodus of money and/or investors recently? If so, it may be time to get out.

**Petunia 100** · 02-22-2013, 08:45 AM

Well, it looks like you're buying the top stock picks of manager Ken Heebner and paying 1.05% per year to do it. So, if you think Heebner knows what he is doing, you stay put. If you think he doesn't, you bail.

Myself, I prefer to buy the entire market, pay .07% per year, and eliminate the risk that a fund manager will underperform the market. I also eliminate the chance a manager will outperform, but since the odds are overwhelmingly against, I am OK with that.

**feh** · 02-22-2013, 09:24 AM

Originally posted by Petunia 100 View Post

Well, it looks like you're buying the top stock picks of manager Ken Heebner and paying 1.05% per year to do it. So, if you think Heebner knows what he is doing, you stay put. If you think he doesn't, you bail.

Myself, I prefer to buy the entire market, pay .07% per year, and eliminate the risk that a fund manager will underperform the market. I also eliminate the chance a manager will outperform, but since the odds are overwhelmingly against, I am OK with that.

I agree completely.

This fund is a good example of why to avoid actively managed funds. From 2003-2008, it did really well. Over the last 5 years, it has been terrible, and for the most part has not taken part in the 4 year bull market.

Buy an index fund. Save on expenses.

**violet80907** · 02-22-2013, 09:24 AM

I previously posted this thread regarding the use of a stop loss -> http://www.savingadvice.com/forums/i...stop-loss.html

You could read that, and decide if you think this might be applicable to you in the future, given the funds you are holding. The post is written with example ETFs, but the principle can be applied to mutual funds as well.

Also I generally agree with Petunia 100 with regard to fees. One percent is a lot to pay...

**woodie96** · 02-22-2013, 09:33 AM

Yes, It has been terrible over the last 5 years.
My initial thought was to ride it out because until I actually sold, it was just a loss on paper.
In 2011 it was 8:1 ratio of people getting out to people buying in.
In the first six months of 2012 it was 5:1.

It appears that the mass exodus has probably taken place over the past couple of years.

I had hoped it would continue to rise and I could at least break even before bailing, but with the economy and the impending sequester and the possible effects of that, it might be better to cut the losses now.

**Wino** · 02-22-2013, 09:36 AM

Do you think it will go lower? If so, sell.

If you think it is at a bottom, then buy.

If you have no idea which way it will go, then why did you buy it in the first place?

I'd give you a better answer, but my crystal ball is broken.

**woodie96** · 02-22-2013, 09:44 AM

Its been anywhere from $23 to $33 since June '11.
What is killing me is the initial buy-in at almost $61.

I may have to look further into ETFs.

My wife and I got started investing late, we are both 48. So due to the late start I am probably over-reaching in stock% and risk.

**kv968** · 02-23-2013, 03:03 AM

Originally posted by woodie96 View Post

I may have to look further into ETFs.

My wife and I got started investing late, we are both 48. So due to the late start I am probably over-reaching in stock% and risk.

Not sure if you're "over-reaching" with your stock percentage and risk on the whole since you didn't post the rest of your portfolio. I just wanted to add that there's portfolio allocation and individual fund allocation.

You may be over-reaching with your overall portfolio allocation (i.e. 100% stocks) but the fund you mentioned is definitely concentrated in that it only generally holds 20 stocks (and currently seems to even have some leveraged positions on them). Not that holding a fund like this is necessarily a bad thing if it was a relatively small part of your overall portfolio but if it's your way of "swinging for the fences" since you got a late start I don't think that's the way to go. Works out great when it does but not so much when it doesn't as you've seen.

I'd suggest, as others have, that you look into ETF's or index funds which are more diversified than this fund. And more importantly, take a look at your entire portfolio's allocation to make sure that you're not taking on too much risk. I know it may it be tempting since you feel you've gotten a late start but one bad turn in the markets could be more detrimental than just starting late.

If you want to hold onto a little of this fund "just in case" I'd say go ahead but factor it into your overall allocation and I wouldn't hold much more than 5% of the total portfolio in it IMO.

**humandraydel** · 02-23-2013, 04:26 AM

Originally posted by woodie96 View Post

What is killing me is the initial buy-in at almost $61.

This is a complete fallacy. If you had sold this fund in 2009 and taken a HUGE loss, but put the money into the S&P500 index, you'd have a huge gain since then. At any given time, it isn't about whether you have "lost" money on an investment, it's about what the returns are going forward.

Sell and buy VTI (Vanguard Total Stock Market Index).

**humandraydel** · 02-23-2013, 04:31 AM

The fund's top 10 holdings look a little scary to me! Note that 79% of assets are accounted for in these 10 positions.

Top 10 holdings
Security Net Assets
Citigroup Inc (C) 10.74%
Lennar Corporation (LEN) 9.09%
Morgan Stanley (MS) 8.94%
DR Horton Inc (DHI) 8.47%
US Treasury Bond 3.125% 8.18%
PulteGroup Inc (PHM) 6.95%
US Treasury Bond 2.75% 6.80%
Herbalife, Ltd. (HLF) 6.74%
Polaris Industries, Inc. (PII) 6.66%
Bank of America Corporation(BAC)6.41%

**cascade11** · 02-23-2013, 03:37 PM

I looked up this fund's prospectus on MorningStar and they give it ONE star. That's pretty bad. I'd ditch it.

**elessar78** · 02-23-2013, 08:13 PM

It's just one perspective on investing but it's the one (and other's above I ascribe to), look up John Bogle's investing advice on mutual funds.

Basically you're in a mutual fund, but not letting the actual power of a mutual fund work for you. You're chasing the performance of the fund and you're monitoring it, seemingly, day to day and week to week. Like you said, it needs to be a long-term thing.

You're probably antsy, because you're not totally (or mostly) on board with the investing philosophy of your fund.

Bogle and others, say that over the course of many years, no one can outperform the stock market. Reams of data to date agree with this thesis. So if you accept the fact that you cannot beat the stock market in the long-run—you should seek to match it's performance AND minimize what you lose through (management fees, active trading fees, taxes). The things in the parenthesis are what eat into what you get to keep from your mutual fund.

Like the other posters have said, consider getting into a Total Stock Market INDEX fund or SP500 based index fund. The stocks in this are set, so you don't lose anything from constantly buying or selling stock within the fund, the manager gets a small fee (.06%-.07% compared to 1.05% you're currently paying).

The core of this principle is that the stock market has always gone up in the aggregate. So as long as you're in for the long-haul THEN your money will grow.

But you should also pay attention to asset allocation, so you don't have all your eggs in one basket. Meaning split up your money between equities (stocks) and bonds. The general rule is that the percentage of bonds match your age. So if you're 48, you'd have 52% in stocks, 48% in bond-based mutual funds. THEN further diversify your stock holdings between US stocks and International. I can't recall the recommended split between US and International stocks at the moment.

It's a very simple approach and very boring, but I think you can see why the ups and downs of the market aren't all that great to live through.

Basic premise is: don't put all your eggs in one basket and lose as little as possible to fees and taxes.

**bennkar** · 02-24-2013, 08:12 PM

Originally posted by humandraydel View Post

The fund's top 10 holdings look a little scary to me! Note that 79% of assets are accounted for in these 10 positions.

Top 10 holdings
Security Net Assets
Citigroup Inc (C) 10.74%
Lennar Corporation (LEN) 9.09%
Morgan Stanley (MS) 8.94%
DR Horton Inc (DHI) 8.47%
US Treasury Bond 3.125% 8.18%
PulteGroup Inc (PHM) 6.95%
US Treasury Bond 2.75% 6.80%
Herbalife, Ltd. (HLF) 6.74%
Polaris Industries, Inc. (PII) 6.66%
Bank of America Corporation(BAC)6.41%

Wow, that's quite the group there. Homebuilders, financials, bonds, and Herbalife(!?!?!). Who came up with this mixed bag??? All that and top heavy too, yikes. Anything is possible, but... I would stay away (far away) too.

**woodie96** · 02-26-2013, 09:58 AM

Thanks for the input everyone.
I just ran my portfolio through the morningstar instant xray.

Here is the gloom and doom.

The allocation is currently, 67% US Stocks, 20% Foreign Stocks, 10% bonds, 1% Cash, and 2% Other.

Sad part is the average expense ratio is 1.3%. I can see where this is killing me.

The 20K in CGMFX represents 27% of my total portfolio.

I have my portfolio divided up into two classes if you will: The pre-tax 401K from work $26K, and regular mutual fund with post-tax income 49K.

Pre-tax 401K is broken out into the following funds: ARWAX, ODMAX, PAUAX, and THVRX
Other funds are : CGMFX, CGMRX, RYOHX, and RYVPX

Each month, $600 goes in the work 401K, and the wife and I contribute another $400 to the other mutual funds.

I will check and see what is available through the work 401K and post those funds later.

Feel free to chime in and offer suggestions or critiques as you see fit.

Thx.

Cut losses and move on to something better?