ARBOR WEALTH: Stock picks, mutual funds, etc.

Margaret R. McDowell
Special to The Log
Published: Thursday, August 28, 2014 at 08:01 AM.

“Somehow I think them experts ain’t so expert.” Robert Redford as Sonny Steele in The Electric Horseman


The Electric Horseman is a silly little dramatic comedy from 1979, starring Robert Redford and featuring Willie Nelson in his first major acting role. Sonny Steele, played by Redford , is a former five-time world champion rodeo cowboy who now hawks Ranch Breakfast cereal. The corporation which owns Ranch Breakfast and employs Sonny Steele also owns Rising Star, a multi-million dollar stallion. 

But the corporate horse handlers are shooting Rising Star full of steroids and barbiturates so the animal can be paraded on stage in Las Vegas at the corporation’s press revue. Steele, realizing that Rising Star is injured and drugged, rides the horse out of the casino hotel, down the strip in Vegas, and out into the mountains of Nevada . His goal? To restore the horse’s health and release Rising Star into a canyon with other wild horses.

Prior to Steele’s horse thievery, he argues with the corporation president about the treatment of the animal. The executive assures Steele that the horse is under expert care. Steele replies, “Somehow I think them experts ain’t so expert.”

Many investors and advisors feel the same way about opinions offered by mutual fund “experts.” Mutual funds are essentially a packaged group of individual securities. One advantage of mutual funds is that the investor is less susceptible to significant loss, since the fund is diversified.  

A valid criticism of mutual funds is the inherent layers of shareholder fees. For example, many mutual funds charge 12b-1 fees, which are expenses related to the distribution and marketing of the fund. Broker commissions and advertising, for example, would be paid by 12b-1 fees. In addition to 12b-1 fees, there are management fees, administrative fees and operating costs to be paid by shareholders.

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