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History & Overview

In one form or another, mutual fund companies have existed in the United States since 1924 with the advent of the Massachusetts Investors Trust managed by Massachusetts Financial Services and later the formation of State Street Investment Corporation (mutual funds as investment vehicles predate these companies). In many ways, the general idea has remained the same ever since – offer small investors, or savers, access to diversified portfolios as a low-risk means of growing financial wealth. Like other financial services vendors, these investment intermediaries match savers with borrowers and provide both parties with risk sharing, liquidity, and reduced information costs. By an Investment Company Institute estimate, mutual funds worldwide accounted for close to $27 trillion USD in investment dollars as of the end of 2012. The industry is significant, needless to say, and these investment vehicles are a lazy strategy favorite. Here we offer a primer on mutual fund companies and funds, complete with a summary of some key judgement metrics. Continue reading

scary parallel chartFor some reason (probably just because fear sells), a particular chart has been making the rounds of late. It draws a “scary parallel” between the recent performance of the DJIA and that of the same prior to the 1929 crash, implying that a significant decline is impending (maybe). Already just this month three analysts over at The Wall Street Journal’s MarketWatch have penned at least four articles inspired by the graphic (including this retort), after it first appeared in the McClellan Market Report in late November, and more articles than that have been posted since the start of December. What should you do about it? Continue reading