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Strategies & Market Trends : The coming US dollar crisis

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To: Real Man who wrote (358)7/13/2007 11:36:43 AM
From: stan_hughes  Read Replies (2) of 71456
 
Some long stock funds also hold them as an imperfect hedge against a crash -- it shaves a bit off their returns, which also helps explain why there are so many funds out there that appear to not do as well as the indexes -- they have to cover the extra freight

Returns always take a back seat to risk management when most if not all of the manager's fees are earned based upon the dollar value of the funds under administration as opposed to taking a percentage of any gains made, e.g. private client WRAP accounts. You can talk your way out of posting poor returns, but you'll never be able to talk your way out of how you lost half of someone's cash

It kind of makes you wonder why anyone would go for a percentage-of-assets deal for handling their money, but there are a lot of people out there with lots of dinero and no knowledge whatsoever about what to do with it. They may gripe from time to time, but they still seem to accept their small returns -- back-end loads also help keep them in poor performing funds
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