we've taken over the place, putting coasters under drinks and telling you that you have to smoke your cigars outside.
LOL!.... Cigars definitely go outside!!!
I've made a point to ask as many people as I know what their thoughts are about the mutual funds "scandals". I still haven't found one person who is concerned about the subject. I don't think this is an issue for the average person who has a job, and is funding their Pension Plan.
Most people I know are funding *more money* into their Pension Plans this year, because they feel more optimistic about the economy recovering.
No Need to Fret Despite Fund Scandal
Sunday November 23, 9:34 am ET
By Herbert Lash
Reuters
NEW YORK (Reuters) - The scandals roiling the mutual fund industry have more than a few investors wondering if a mutual fund company could go belly up and leave shareholders penniless, just like Enron and WorldCom.
In a nutshell, industry analysts say investors cannot lose their shirts even if huge amounts of money are rapidly redeemed from a mutual fund company in a bank-like run on assets.
The almost daily revelations of malfeasance in an industry that has prided itself on a squeaky-clean image has created doubts in some of the 95 million Americans who have entrusted mutual fund companies with $7 trillion of their life savings.
"There's nothing like that here, and that's why I don't think you're going to see a run-on-the-bank scenario with mutual funds," said Don Phillips, managing director of research company Morningstar Inc.
"There's no grieving victim. There's no one to go on the nightly news to say, 'Gee, we had $100,000 and now we have nothing,"' he said.
In a worst-case scenario, when underlying securities are illiquid or represent a high risk, a fund's value could suffer. But even if a management company were to go bankrupt because of poor finances, a mutual fund's holdings can't go up in smoke.
A custodian holds the assets that a fund company manages, and in a sell-off, a portfolio's diversification and the market's breadth would keep security prices from plummeting.
PROBITY REQUIRED
To be sure, the scandals have sent shudders through the industry and scared investors. A number of senior executives have lost their jobs, including the long time chief executive of Putnam Investments, the No. 5 U.S. mutual fund company.
"There are people out there bandying about these kinds of words, and they're very scary words: 'skimming,' 'bilking the public,' 'lose your shirt,' 'the sky is falling,"' said Michelle Smith, managing director of trade group Mutual Fund Education Alliance. "The American public deserves to hear there's a lot more foundation here than a scandal can rock."
Broad regulations have governed the industry since the 1940s and a fund company has never collapsed, taking its shareholders' money with it, Smith said.
Suggestions the fund industry is unsafe or investors should redeem funds and bail on long-term investments without careful evaluation, is unfair and misleading to investors, she said.
But the trade group does recommend that if a fund company is under investigation for improper trading and if an investor doesn't get the information that has been requested, making a change in funds should be taken into consideration.
The group, a trade association for mutual fund marketers and distributors, also recommends visiting a fund's Web site and review their prospectus about trading procedures.
NO BANK HEIST
For investors worried about their savings, a portfolio manager can't run off with fund assets, like an embezzling chief executive flying off to Rio. A company could be found guilty of a securities violation, or even be shut down by regulators, but the money it manages would remain safe.
"In financial terms, this really isn't a big deal," Philips said. "But in terms of the ethics and fiduciary responsibility that fund managers owed to shareholders, it's a huge deal."
Jack Bowers, editor of the Fidelity Monitor newsletter in Rocklin, California, said if redemptions at Putnam were to increase, its funds would become smaller and expenses would likely rise. About $21 billion was yanked from Putnam, which settled securities fraud charges last week, in the first two weeks of November, or almost 8 percent of its managed assets.
"As for mutual funds going belly up, it's kind of a ridiculous idea, really," Bowers said. "If Enron was like a bank heist, this mutual fund thing is the equivalent of the parking meter and not putting any money in."
Said Roy Weitz, publisher of industry watchdog fundalarm.com: "It's hard to conceive a scenario where XYZ fund company goes out of business and the XYZ funds also go to zero. I can't even think of a scenario like that."
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