Youve already read that I think you should sell your mutual funds But if you

Youve already read that i think you should sell your

This preview shows page 241 - 244 out of 263 pages.

You’ve already read that I think you should sell your mutual funds. But, if you are honest, you must have thought, “What if the fund goes up after I sell it? I will be very angry at Phil Town and think he’s an idiot.” Okay, you probably will think I’m stupid if that happens! So let me protect myself at least a bit and teach you right here how to determine if you are investing in one of those rare mutual funds being run by a great Rule #1 stockpiling fund manager—someone who will give you a huge, compounded long-term rate of return. First off, there are virtually no great Rule #1 stockpiling fund managers. How do I know that? Did I personally study every one of the
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more than 18,000 mutual funds? No. But I know that great Rule #1 investors sometimes stay in cash for years while waiting for a wonderful business to go on sale. And I know that no mutual fund managers can sit in cash for years without having so many of you withdrawing your money that they get fired. Remember, fund managers don’t get a piece of the profit they make you. They get a fee. And they are not your friends. They are not going to do what is right. They are going to do what gets them paid the most. Remember, they get that 1 percent to 2 percent fee whether they make you any money or not. But if they don’t do something to make you money quarter by quarter, if they sit in cash and do nothing, then most of you get ticked off and withdraw your money from that fund and invest in one that is performing better in the short run. So fund managers know they have to be active. And that prevents them from becoming the stockpiling money geniuses they long to be. So let’s get this straight right now: virtually none of your fund managers are true stockpilers because the system does not allow them to be. But some of them are at least interested in buying wonderful businesses when they are cheap, even if they can’t wait all year for special opportunities. So if you’ll go to your computer, I’ll walk you through the steps to see who you’re trusting with your hard-earned money. Step One. Go to MSN Money. In the little box, type in the stock symbol of a mutual fund in your 401(k). (Don’t know the symbol? No problem.) Type in the first name of the fund. “Fidelity,” for example. You will get a list of stocks and funds with the word Fidelity in them. Now type the second name of the fund: “Magellan.”
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Now the list shrinks and there it is. You can see the symbol “FMAGX” to the side of the name. (Write it down someplace.) Now, click on the name or symbol, and that mutual fund information will come up in the window. Go. Now. Do it. Step Two: Click on the left menu called “Top 25 Holdings.” You’ll see a page listing the twenty-five stocks that make up the majority of the fund. Step Three: Click on the top company. You’ll see the window change to the page on that company. Do it. Step Four: Do a four M analysis on that business.
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  • Spring '20
  • Warren Buffett

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