# Frustrated



## Dantoronto (Feb 20, 2012)

Hi Guys
I'm new here and could use some comments on my the dismal state of affairs regarding my investments.

First off, I'm with Investors Group and completely invested in various mutual funds. Last fiscal year I lost 13%. I have 2 friends who just told me they came out with a very small profit last year even though the market was down considerably over the year. Obviously I have to do something. I'm 55 years old and don't have alot of time left to build for my retirement. I don't have a pension. I have been reading these forums and the jist of what most people say here is that I have to get away from mutual funds mostly because of the high MER.

The fundamental problem I have is that I can't simply move all my money as it takes 7 years to get rid of all the back end fees. The fees in years look something like this - 5.5,5.5,5,4,3,2,1. My first plan is to not ever give them my RRSP contibution like I did again this year. That's a no-brainer. My long term strategy is to go self directed and beg for advice on stocks etc at that time.

Anyway, I do have a plan for the shorter term which I could use some comment on. Since I'm stuck playing the mutual fund game for a while this is what I plan on doing. For all the years that I've watched my funds they always seem to go down in the summer months. I have a friend who is a day trader who told me that in the last 60 years if a person was in the market from November to May there would have only been 6 years that you would not have made money. The only time I seen my funds go up since I've been doing it is after the recession. The big thing here is NOT LOSING MONEY. I haven't made money since the recession and still have not fully recovered from it. 

So, what I plan on doing is putting all my money into money market at the beginning of May with plans to put it back in about November. If I had of practiced this all these years I would of accidentallly been out of the market when the recession hit and made a killing the next year. Also I would have made alot more money all the other years based on my experience.

Now remember, the only strategy from my advisor is to always stay invested and wait it out. If I see a big dip over the summer and jump back in do I not win the game even if the market goes down further compared to what I have been doing all these years? My other thought is that Europe could go down the toilet and I could have a chance to be cash should that lead to recession. That would be a home run for me as I would be the first to get back in the market when everything looks bleak.

I realize that this is not how to properly invest but I feel I have to do something different until I can get out of Investors group. Your comments and advice would be appreciated.


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## KaeJS (Sep 28, 2010)

Really sorry to hear about your situation. 

Some people believe in the "Sell in May and Go away" theory, but I'm not sure I do. The market doesn't always go down over the summer. Also, keep in mind that even if the market stays flat, you could be earning ~4% in dividends over that time frame, which is 6 months (usually two dividend payments, which would equal to 2%).

Also, what you have written above has lots of assumptions based on past events and expectations of future results. The past doesn't always play out like it has before (it does a lot of the times, but not always).

Nobody knows what's going to happen to Europe. I don't think they will go down the toilet, to be honest.

I think what you need to do is keep reading and start your own DIY Couch Potato portfolio with some solid dividend paying ETF's that invest in high quality blue chip companies that are recession proof (Bell, McDonalds, Kraft Foods, etc.)

http://canadiancouchpotato.com/model-portfolios/


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## MoneyGal (Apr 24, 2009)

Dantoronto said:


> So, what I plan on doing is putting all my money into money market at the beginning of May with plans to put it back in about November.


The main problem with this strategy is that you are likely to hit re-set on all the DSC schedules every single November. Will they let you switch without re-setting the DSC clock? I doubt it.


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## OptsyEagle (Nov 29, 2009)

Take a look at the performance of that strategy from buying in November of 2008 and selling in May of 2009. You will also need to look at the price you would be buying back in at again in November of 2009.

I suspect it would take that strategy quite a few years of outperformance to make up for that disaster of a move.

http://ca.finance.yahoo.com/q/bc?s=^GSPTSE&t=5y


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## Square Root (Jan 30, 2010)

Simplistic timing models such as sell in May, or as January goes so goes the year, or the Santa Claus effect are just that, simplistic. If you want to use these I think you are making a big mistake. Maybe even as big as staying with Investors Group. Get your money out as soon as you can and put it into diversified ETF's. Forget about trying to time the markets. Much more experienced investors than you have given up on that. good luck.


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## Daniel A. (Mar 20, 2011)

At the moment your stuck unless your willing to take the hit.
I'm not a fan of mutual funds had some in the early 80s same company.
I also day traded for a few years and yes the markets are slow in the summer.

Picking some good dividend paying stocks with the focus on getting a good buy in price point would be my choice.
The nice thing with this is even if the stock drops 10% the dividend still comes.
Remember dividends are a buy and hold in your plan not active trading.

With so much uncertainty in the EU as well as the potential of the middle east it would be very hard to make a call one way or the other.
Day traders bail at the end of every day not waiting for bad news overnight.

Financial service has been one of the top growth industries, nothing but a transfer of your wealth to their pocket. You assume all the risk of their decisions and pay them well. When your down 15% it has nothing to do with them it's the market and they get paid just the same.


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## Four Pillars (Apr 5, 2009)

Here is my advice about what to do with your mutual funds:

http://www.moneysmartsblog.com/defense-mutual-fund-dsc-fees-investors/


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## londoncalling (Sep 17, 2011)

Daniel A. said:


> .
> 
> Financial service has been one of the top growth industries, nothing but a transfer of your wealth to their pocket. You assume all the risk of their decisions and pay them well. When your down 15% it has nothing to do with them it's the market and they get paid just the same.


It's better to own the stock of the financial service company than to give them your money to invest. Currently banks are still offering a nice yield at around 4%. Over time convert your mutual funds to etfs,individual dividend stocks or a couch potato portfolio depending on your comfort level, knowledge level and desired time allocation for investing.


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## Cal (Jun 17, 2009)

What I read was your solution to your error in listening to a weak investors group rep is to listen to another friend, and to sell in may and go away.

You may want to investigate the canadian couch potato portfolio, get some exposure, stay diversified. But do your own homework.

Stay on this forum and educate yourself as much as possible. Be informed and confident in making your own decisions.


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## GoldStone (Mar 6, 2011)

Dantoronto said:


> My long term strategy is to go self directed and *beg for advice on stocks* etc at that time.


Begging for advice on stocks is NOT a sound investment strategy. I will go as far as saying it's not necessarily better than keeping your money in high-MER funds.

Like others suggested already, I recommend that you look into couch potato investment strategy. You can implement it using low-MER index funds (like TD eFunds) or/and ETFs.

Once your couch potato portfolio is in place, you can put aside some play money to buy stocks.

_Regarding the transition from the high-MER funds to DIY:_

Read the fine print of your existing contract(s). Some mutual fund companies allow 10% of the account to be moved from the back-end funds to the front-end funds. 10% transfer is penalty-free. You have to take advantage of the 10% every year - you can't carry it over to the future years.


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## Dantoronto (Feb 20, 2012)

OptsyEagle said:


> Take a look at the performance of that strategy from buying in November of 2008 and selling in May of 2009. You will also need to look at the price you would be buying back in at again in November of 2009.
> 
> I suspect it would take that strategy quite a few years of outperformance to make up for that disaster of a move.
> 
> http://ca.finance.yahoo.com/q/bc?s=^GSPTSE&t=5y


Thanks for your input guys.
Opsy.....I think you missed a little bit of what I was trying to say. With my strategy I would have accidentally been cash right when the market was hitting all time highs in 2008.That year I would not have gone back in the market in November. I don't know exactly when I would have jumped back in when the rebound started but I know I would have at some point. This is the kind of thing that I would be looking for with my strategy.

Having said that, the November thing is not written in stone. I would definately get out in may but I would be looking for any substantial dip in the summer......like say 1,000 points on the TSX. If I went back in before November it would be with the intention of staying in until the following May.

The fundamental principal is to improve upon what I doing now, which is basically stay in no matter what. Remember, I'm stuck with Investors group for a few years until my back end fees are reduced to an amount I can swallow. Remember, with Investors you only have a choice of Mutual funds and GICs.....as far as I know anyway......


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## Dantoronto (Feb 20, 2012)

Square Root said:


> Simplistic timing models such as sell in May, or as January goes so goes the year, or the Santa Claus effect are just that, simplistic. If you want to use these I think you are making a big mistake. Maybe even as big as staying with Investors Group. Get your money out as soon as you can and put it into diversified ETF's. Forget about trying to time the markets. Much more experienced investors than you have given up on that. good luck.


There's nothing that I would agree with more than that it is impossible to truly time the markets. However, I have gone back over the last 5 years and I would have won the game big time if I had of done this strategy. (note: I would have not gone back into the market during the recession but I would have been accidentally cash when it started)

For example, If I were to go money market right now I would be up 7% for the year. If I guess wrong and the market goes up this summer then I simply would not go back in until there is a dip where I'm buying the same shares cheaper. I have already made money this fiscal year. Compared to what's gone on for me the last few years I'll take it. So far everything is playing out this year as it did last year.....almost exactly....


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## indexxx (Oct 31, 2011)

From FourPillar's link:

"Should I wait to convert my expensive funds to cheaper index funds? No.
If you own an expensive mutual fund with a 2.50% annual MER and wish to switch to a cheaper fund which has a 0.5% annual MER, then you will save 2.0% per year. As long as you stay invested in the cheaper fund for at least a few years, then the annual savings will quickly outpace any DSC fee."

I agree, but personally, (and I'll get blasted for this) I would ditch the mutual funds outright and bite the DSC as above, and re-invest by maxing out my TFSA in growth stocks, (Apple is still a pretty solid call) in order to recoup my losses. The balance of your cash from selling can be indexed as in the Couch Potato strategy, and also holding some solid dividend payers/DRIPs will go a long way; you still have some time. I think you could beat the DSC within a year; I'd stop losing money in a poor fund and make it up in equities. BTW are you including the fees in your 13% loss?


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## OptsyEagle (Nov 29, 2009)

Dantoronto said:


> Thanks for your input guys.
> Opsy.....I think you missed a little bit of what I was trying to say. With my strategy I would have accidentally been cash right when the market was hitting all time highs in 2008.That year I would not have gone back in the market in November. I don't know exactly when I would have jumped back in when the rebound started but I know I would have at some point.


Do you really believe that. If you were not willing to buy back in on an automatic schedule in November because you foresaw some further declines, do you really think that in March of 2009 (just before it rose about 70%) you would have felt a lot better about it? Do you think April or May would have reassurred you more. Go look at the newspaper headlines in those months. Very little was reassuring. The reassurance started showing up around October, November of 2009, if I recall.

My point is, you either make this strategy mechanical or sentimental. Sentimental will put you on the wrong side more often then not and the mechanical strategy will do it too often to make it worthwhile. 

Just my opinion.


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## Square Root (Jan 30, 2010)

I think trying to back test a simple timing model is not valid. In my opinion it's like saying" if only I had bet red at the roulette table" after an unlikely string of reds had come up. The past is not a reliable predictor of the future when it comes to simple timing models.


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