Am I being taken or just unlucky

Hello,
I switched from Merrill Lynch to TD Waterhouse a couple of years ago.
I like to do some trading on my own, and ML commish was killing me. In
the past year, I have received a call from a Waterhouse broker who has
gotten me into some funds, bonds, and preferred stocks, that have, well
underperformed. What bugs me is that for several of these, there has
been a 10% or more drop almost immediately, and then down another 5,10,
or %15 there.
The latest example is from earlier this week. He called and convinced
me to sell a Clipper fund that I had gotten in earlier, because the
managers were leaving after 20 some odd years...OK, so he convinces me
to get into a VALUE LINE TARGET 25 fund instead.
Well, the VL fund is down 13% in less than a week!!!
I had a similar experience with another VL fund about 6 months ago that
he recommended.
He also got me into a GM bond about 8 months ago that fell almost
immediately, and is now down over 20%...now I know that with rates
going up and GM having some problems, some depreciation was to be
expected. I know I'm probably paranoid. But I feel like there is some
game being played (Am I being screwed in favor of bigger clients??).
Overall, the funds he has gotten me into have done lousy, but it is the
ones that have tanked almost immediately that really make me go 'what's
going on??' Am I being paranoid? Just unlucky?
Thanks for letting me vent

Re: Am I being taken or just unlucky

"Japhy" <> wrote
> Hello,
> I switched from Merrill Lynch to TD Waterhouse a couple of years ago.
> I like to do some trading on my own, and ML commish was killing me. In
> the past year, I have received a call from a Waterhouse broker who has
> gotten me into some funds, bonds, and preferred stocks, that have, well
> underperformed. What bugs me is that for several of these, there has
> been a 10% or more drop almost immediately, and then down another 5,10,
> or %15 there.
> The latest example is from earlier this week. He called and convinced
> me to sell a Clipper fund that I had gotten in earlier, because the
> managers were leaving after 20 some odd years...OK, so he convinces me
> to get into a VALUE LINE TARGET 25 fund instead.
> Well, the VL fund is down 13% in less than a week!!!
> I had a similar experience with another VL fund about 6 months ago that
> he recommended.
> He also got me into a GM bond about 8 months ago that fell almost
> immediately, and is now down over 20%...now I know that with rates
> going up and GM having some problems, some depreciation was to be
> expected. I know I'm probably paranoid.

I wouldn't call it paranoia as much as perhaps inexperience.

Can you talk a little about your investment goals? That is, are you
investing for retirement? Trying to turn a quick buck?

Do you have a portfolio allocation plan, based on your risk tolerance and
years to retirement?

When you bought the GM (GMAC?) bond, was your intent to hold it to maturity?
If so, I don't count a bond that has dropped in value (assuming no company
default) but is intended to be held to maturity as a "loss."

Do you know what an index fund is?

> But I feel like there is some
> game being played (Am I being screwed in favor of bigger clients??).
> Overall, the funds he has gotten me into have done lousy, but it is the
> ones that have tanked almost immediately that really make me go 'what's
> going on??' Am I being paranoid? Just unlucky?
> Thanks for letting me vent

If one is buying stocks, IMO one should plan to be in for the long run. Now
you cut a lot of your risk by buying mutual funds, but there is some wisdom
for selecting funds, starting with portfolio allocation. This assumes you
are not a gambler.

What is your interest in being a do-it-yourself investor? If it's little,
then it's time to shop for a bona fide financial planner. I suggest you ask
about both at misc.invest.financial-plan .

Re: Am I being taken or just unlucky

Hello. The transaction I am talking about are in an IRA...so for
retirement.
I worked out a allocation plan with my TDW broker, and made the
purchases
from a large (for me) amount of cash I moved over from a 401k. The
transactions
I am speaking of were 'solicited' by him after the initial purchase.
I make 'alot' of small stock purchases, based on my own research, and
do OK (Up around 12% this year on these transactions). I now work for
myself at home, and found myself with less time for research. Thus, I
asked TDW broker for some advice.....
I agree re: the bond....it just seemed like the steady drop right after
he pushed it and I bought it smacked of conspiracy in my paranoid mind.
Would you say I just didn't understand the risk, for instance of the VL
select 25 that just tanked? 25 stocks, I assume, is a small number of
stocks, thus more risk than most funds.

Re: Am I being taken or just unlucky

"Japhy" <> wrote
> Hello. The transaction I am talking about are in an IRA...so for
> retirement.
> I worked out a allocation plan with my TDW broker, and made the
> purchases
> from a large (for me) amount of cash I moved over from a 401k. The
> transactions
> I am speaking of were 'solicited' by him after the initial purchase.
> I make 'alot' of small stock purchases, based on my own research, and
> do OK (Up around 12% this year on these transactions). I now work for
> myself at home, and found myself with less time for research. Thus, I
> asked TDW broker for some advice.....
> I agree re: the bond....it just seemed like the steady drop right after
> he pushed it and I bought it smacked of conspiracy in my paranoid mind.

GM (and its affiliate, GMAC) have been downgraded fairly steadily in the
last few years. (I'm going from rough memory.) I think it hit junk just a
few months ago. That would not necessarily be easily anticipated. Whatever
guess a person made in advance would be... a guess.

I suspect more likely what happened is that interest rates simply rose. All
higher grade bonds drop in value after an interest rate increase, so as to
compete with new issues at higher interest rates. (GM/GMAC may be junk-rated
right now, but it's high grade junk, if you will, and IIRC.)

> Would you say I just didn't understand the risk, for instance of the VL
> select 25 that just tanked? 25 stocks, I assume, is a small number of
> stocks, thus more risk than most funds.

Could you tell me, off the top of your head, what Value Line Target 25's
goals are? If not, then I think you took a kinda blind gamble and were maybe
too trusting. One of the first rules of investing: Never put money into
something whose business you do not understand at least a bit.

It's not a mutual fund, but a "unit investment trust." The trappings of
these aren't nearly as transparent as mutual funds, and I see First Trust
(the manager of this trust) has several ways they're making money off
customers with this trust. See
for FAQs on Value Line
Target 25 and its relatives.

Value Line Target 25 is heavily weighted towards energy, which explains its
recent dive.

5 warns about this, as a matter of fact.

The TDW guy has a right to solicit. He hasn't broken any law. The customer
must be sharp and keep asking questions (with documentation for the answers)
until s/he understands the product. But hey, I don't know anyone that hasn't
made a "bad" investment choice. The goal is to make way more good ones than
bad ones. Don't knock yourself around too much. Plus, it ain't over until
the fat lady sings.

Another rule: Any new financial advisor you meet should, at least for the
first six months, be trusted no more than you would trust a used car
salesman. There are some good ones, but there are plenty of sharks too.

Some of my questions still remain: For how long are you investing? Are you
trying to make a quick buck?

Are you acquainted with various free online allocation tools to give you
some ideas about how you should allocate? This question comes up so much
that I threw together a list at
, to get newbies started.
(Granted you're not a total newbie, but you might get some ideas from these
tools.)

I will add that I ditched TD Waterhouse not long ago. That was a big move
for me, and I didn't do it lightly. (Well, TDW may say otherwise.) Their
folks at the 800 number are not always polished. I'm not talking about one
guy/gal. I'm talking about several communications with different reps. Email
me if you want details. Still, I'd consider going back, IF they made it
worth my while, with super-low commissions, etc.

Any interest in index funds, supplementing your individual stock picks, say?

They might give you a bit more peace of mind, for a number of reasons.

Hopefully more will jump in to make suggestions. I am biased towards index
funds, especially for young investors without too much experience, though I
own individual stock/bond positions, too. You need to hear from more people
to make a good decision about your future direction. So do post at
misc.invest.financial-plan ! There's a different flavor to the advice there.

Hang in there. There's really no huge rush to making major changes, from
what you're telling me. So take your time getting re-grounded.

I remember Black Monday, October 1987. Lost something like 20% of my
investments that week, while in graduate school. It was a lot of money to
lose in a few days for a young person. I thought, "Shucks, I knew this could
happen. Plus, 80% of a lotta money is still a lotta money." Told some
friends about it and laughed it off. I let it be and everything turned out
fine.

Re: Am I being taken or just unlucky

The TD Waterhouse ad says "you can do this".
Question, why aren't you? You seem to be letting them do everything for you.


"Japhy" <> wrote in message
news:
> Hello,
> I switched from Merrill Lynch to TD Waterhouse a couple of years ago.
> I like to do some trading on my own, and ML commish was killing me. In
> the past year, I have received a call from a Waterhouse broker who has
> gotten me into some funds, bonds, and preferred stocks, that have, well
> underperformed. What bugs me is that for several of these, there has
> been a 10% or more drop almost immediately, and then down another 5,10,
> or %15 there.
> The latest example is from earlier this week. He called and convinced
> me to sell a Clipper fund that I had gotten in earlier, because the
> managers were leaving after 20 some odd years...OK, so he convinces me
> to get into a VALUE LINE TARGET 25 fund instead.
> Well, the VL fund is down 13% in less than a week!!!
> I had a similar experience with another VL fund about 6 months ago that
> he recommended.
> He also got me into a GM bond about 8 months ago that fell almost
> immediately, and is now down over 20%...now I know that with rates
> going up and GM having some problems, some depreciation was to be
> expected. I know I'm probably paranoid. But I feel like there is some
> game being played (Am I being screwed in favor of bigger clients??).
> Overall, the funds he has gotten me into have done lousy, but it is the
> ones that have tanked almost immediately that really make me go 'what's
> going on??' Am I being paranoid? Just unlucky?
> Thanks for letting me vent
>

Re: Am I being taken or just unlucky

This week's call could be a honest one depending on value prior
performance, which I don't know for the fund in question. You'll have
to screen it by peer performance to tell. If given a reasonable
comparison, you can't entirely make it his bad call based on this
week's returns. My value funds only show modest declines not nearly at
10% losses for the week. I haven't bothered to check the sector, but
10% in a week I'd expect for a riskier position. Still, losses there
will be because of Greenspan. He cut the dogs of hell loose with the
I-word, inflation. It can happen, especially if it's a muddleabout and
not a top-tracked fund.

6 months ago - putting you in a poor performer is doubly questionable.
Midsummer saw growth in value, small and midcaps. If you don't like
someone telling you how to make their mistakes try and branch out and
make a few on your own.

Japhy wrote:
> The latest

Re: Am I being taken or just unlucky

x-no0archive: yes

Japhy wrote:
> Hello,
> I switched from Merrill Lynch to TD Waterhouse a couple of years ago.
> I like to do some trading on my own, and ML commish was killing me. In
> the past year, I have received a call from a Waterhouse broker who has
> gotten me into some funds, bonds, and preferred stocks, that have, well
> underperformed. What bugs me is that for several of these, there has
> been a 10% or more drop almost immediately, and then down another 5,10,
> or %15 there.
> The latest example is from earlier this week. He called and convinced
> me to sell a Clipper fund that I had gotten in earlier, because the
> managers were leaving after 20 some odd years...OK, so he convinces me
> to get into a VALUE LINE TARGET 25 fund instead.

I don't see this fund listed. What's the symbol? Is it a load fund
and what you are seeing is the effect of paying a load?

> Well, the VL fund is down 13% in less than a week!!!
> I had a similar experience with another VL fund about 6 months ago that
> he recommended.
> He also got me into a GM bond about 8 months ago that fell almost
> immediately, and is now down over 20%...now I know that with rates
> going up and GM having some problems, some depreciation was to be
> expected. I know I'm probably paranoid. But I feel like there is some
> game being played (Am I being screwed in favor of bigger clients??).
> Overall, the funds he has gotten me into have done lousy, but it is the
> ones that have tanked almost immediately that really make me go 'what's
> going on??' Am I being paranoid? Just unlucky?
> Thanks for letting me vent

Re: Am I being taken or just unlucky

"PeterL" <> wrote
J wrote
>OK, so he convinces me
> > to get into a VALUE LINE TARGET 25 fund instead.
>
> I don't see this fund listed. What's the symbol?

It's not a mutual fund. It's a "unit investment trust," with a number of
expensive and risky bells and whistles.

Google for {"value line target 25"} and you'll find more about it. It's
offered by a company called "First Trust."

Re: Am I being taken or just unlucky

"Elle" <> wrote

> It's not a mutual fund. It's a "unit investment trust," with a number of
> expensive and risky bells and whistles.

Gee you're smart, where did you get your PhD anyway?

Re: Am I being taken or just unlucky

"Blondie" <> wrote in message
news:
>
> "Elle" <> wrote
>
>> It's not a mutual fund. It's a "unit investment trust," with a number of
>> expensive and risky bells and whistles.
>
> Gee you're smart, where did you get your PhD anyway?

Don't pick on Elle, she KNOWS about ethical behavior.
I wonder why she doesn't practice it.

Elle said:
"Dear boy, do not--DO NOT--think you serve yourself, the government, the
taxpayer or anyone else well by rationalizing unethical and quite possibly
illegal behavior."

As far as I know, and I have worked for the government in the past, you get
coffee breaks, personal time, lunch, etc.

I think if Elle shaved her chest and back she'd be a lot happier.

Re: Am I being taken or just unlucky

Thanks Elle. You provided some useful information.
I appreciate it!

Re: Am I being taken or just unlucky

Buy this book and read it. "Bogle On Mutual Funds". I have had good
success with this well thought out, if boring strategy. Fire your
broker and buy no load mutual funds direct from the mutual fund
company. Pick your funds based on low fund fees. If in doubt just buy
the Total Stock Market and Total Bond Market. Simple as that really.
None of these brokers know anymore than anyone else about what stock is
going to go up. Neither do the fund managers. Neither do you. So you
are as good as they are. Just keep your fees low. That means no broker
fees and low mutual fund expenses. Good luck and don't give up.

Re: Am I being taken or just unlucky

"Doug" <> wrote

> Pick your funds based on low fund fees.

I wouldn't go that far.