• Bob Brooks

What the Mutual Fund Industry Wants You to Believe

During times where the market is losing money, mutual fund companies go to great lengths to send out calming statistics so that you don't sell your mutual funds. Here is an example from a "hand holding" piece sent out from one mutual fund company.

"The S&P 500 has delivered an average calendar-year return of more than 10%, including positive returns in many of the same years that large declines occurred."

"The index also has delivered positive returns 84% of the time, and has returned more than 20% nearly 40% of the time."

In other words, don't worry about those losses, everything always works out...just look at our statistics. 

Here is what they don't tell you:

Between April 2000 and October 2002, the S&P 500 lost -46% of value. It took 7 years and 5 months to get back to where it was in 2000. Then, one month later (October 2007), it lost another -56% over the next 17 months. Then it took another 5 years and 6 months to get back to where it was in 2007.  

Here is what you are not being told:

If your risk level needs to be reduced, it is dangerous advice to just stay invested in a bear market.

Bear markets (contrary to what Pop Culture Finance says) do occur.

You can lose a lot of value and time in bear markets.

Now, to be fair, we need to see a little more before we can call this an all out bear market.  Just know, the characteristics of one are showing. Bottom Line - don't let the financial services industry tell you moving money around to take less risk is wrong. At the end of the day, if you feel like reducing risk and selling investments, remember it is your money.  

If you have any questions about your investments, I can always share an opinion.  Feel free to email me at .