Hi Tom,
I took a quick glance at cooperlinsehallman.com
and I have a few questions. Why in the world would you want to give your money to an organization that has consistently underperformed the indexes for the past four years? Isn't the whole idea of managing money to do better than the averages?
Regarding market timing. It is nearly impossible, according to many wealthy sources. Buffett and Keynes come to mind here. Very often, when the market moves, it does so in a rush. Do you know where CLH was on Oct. 19, 1987 or how about 10/17/97 or 8/31/98? If CLH was not out of the market prior to those dates, they were not living up to their professed claims. And on the flip side, how about 10/15/98, or 06/16/99? If they were not in the market prior to these dates, they failed to take advantage of the peculiar antics of Mr. Market.
If this money is in a tax-sheltered retirement account, then you are protected from the grasping fingers of the IRS, at least for the time being. If, OTOH, this is a fully taxable account, then each in and out flip has guaranteed that you will pay tax at the highest rate possible. The CLH method is clearly tax-inefficient.
The CLH FAQ and FAQ2 do not specify how the cap gains and dividends thrown off by the mutual fund holdings are to be accounted for. There is a very strong possibility that these may fall, pro-rata, into your lap and present a taxable event.
CLH charges 2.5%/PA for their services. Having not read a prospectus, I am unaware of any other fees that may relate to advertising, administration or redemptions. These should be investigated.
Finally, the Vanguard S&P500 fund charges a flat .25%/PA for a product that for the past 4 years has yielded a better return. To me the choice is obvious.
Best, Ry |
