Conclusion of Things You Can Control

4th. Doubling up- If you are trying to diversify your investment portfolio, don’t double up on your funds. Let’s say you already have a large growth cap mutual fund. Buying another large growth cap fund would just be redundant. If you end up buying two large growth cap funds you will have a lot of duplicate stocks. “You think you’ve got a bunch of different investments; instead you’ve got one big investment of the same kind,” said Ross Levin.

5th. Reading your annual report- I know most people just throw out their annual report when they receive it in the mail. It’s scary, long, complicated, and boring, but there is one section other than the performance statistics you should be looking at. Investment future for the fund is very simple to comprehend. It just shows if the fund has a new manager, and if the fund will be seeking different involvement for your stocks. If you want small value stocks and it changes to small growth and medium value, then maybe you should seek a different fund.

6th. Big time changes- This is almost the same thing as the 5th thing you can control, but has one unique difference. Buying and selling changes. Let’s say you have a fund and it has been performing very well for the past five years. Then suddenly your fund starts going down hill. You call up the fund manager and ask why it’s been dropping so much. He tells you that it’s because of excessive trading activity and venturing in new markets within the fund market. The “stock picking” manager decides to sell some major stocks and purchase totally new ones. This will be reported in your annual report, usually prior to the major change. Sometimes it won’t list the individual stocks that will be traded, but it will disclose the selling and buying of securities. This will usually have a short term drop in your fund, because they are selling your high priced stocks and buying new low priced stocks. If excessive trading isn’t your bag, move to a more conservatively held mutual fund.