Can mutual fund investors beat the market?

FTSE 100 index

Introduction

Many individual investors employ mutual funds as an alternative to direct ownership of stocks or bonds.

Indeed, mutual funds have some advantages:

Diversity: Even a single fund can encapsulate a large sector of the market. Peace of mind: One is less likely to stress out about sudden bad news regarding a particular firm if one owns shares in it only indirectly as part of a large mutual fund’s portfolio. Management fees: Several leading index mutual funds have even lower management fees than corresponding exchange-traded funds (ETFs). And as a class, mutual funds have significantly lower

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Can the January effect be exploited in the market?

Hoarfrost: Courtesy Wikimedia

Introduction

The “January effect,” in common with the “Halloween indicator” and “sell in May and go away”, is a catchy, get-rich-quick investment idea adored by financial commentators because it is so easy to explain to unsophisticated readers. It rests on the claim that the U.S. stock market performs better in January, compared to the other months in the year.

Unfortunately, financial reports promoting the “January effect” are often vague and confusing. One recent example is here, which, like others in this genre, lacks a specific actionable investment strategy. In fact, this particular report does not even

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