I think we're in general agreement. The one caveat I would include is that you do need to pay attention to the fundamentals. If you know what you are doing you can spot problems coming before the herd, and get out of the way. Typically, when operating cash flow lags operating earnings earnings there is trouble brewing. That was a sure warning for OXHP a couple of years ago. Or when license revenues dry up, or when unearned revenues slow, those are two more signs -- those were signs for PSFT and other programming companies. Finally, watch things like the difference between taxes paid and provision for income taxes. That's frequently revealing.
The problem with the funds is that they are big, and so hold many stocks. They need to pay rent, hire lawyers, print prospectuses, etc. They also hire lots of managers and analysts, and all of them expect to be paid. They are also in the business of earning profits. That's why you are much better off with a passive index fund rather than an actively managed fund.
BTW, you are not hurting my feelings. I work as a financial analyst for businesses -- not a securities analyst. I look for stock in companies with exemplary business models and execution.
TTFN,
CTC |
