Yale Hedgies and Reality Checks

Recently I have seen a lot of books and articles telling the "little people" to forget trying to beat the market: "The market is corrupt, mutual funds are corrupt, and stocks are corrupt."  We are supposed to stick with index mutual funds, most of which are still under water from 2000 ,while the smart boys do hedge funds.

Yale's David Swensen may be the most obnoxious of these latter day lords putting us in our place.

http://tinyurl.com/7au8j

Swensen laughs at us for thinking we can do 16% compounded  annually as he has done at Yale with his original $1 billion endowment. Instead we should pay 20% (less undoubtedly for David) per year to hedge fund entrepreneurs to leapfrog the yahoos and dopes.

Apart from the fact that most hedge funds do not prosper and make you rich, there are common everyday mutual funds for us proletarians with 12-16% or more annual returns over many years and at very low cost. With current internet web searches and mutual fund sites anyone with half a brain can indentify these funds and buy them through a broker for a pittance in transaction fees.

I've covered some of this approach before (check the archives), but I can see there is more to report. My first advice is not to rely on someone else to do it for you. Go back and read the basic Merriman ideas about  portfolio diversification, and the virtue of persistence. Let that seep in for a while.

Then go to places like MSN's mutual fund site.  http://moneycentral.msn.com/investor/research/fundwelcome.asp?Funds=1

Look at the various types of funds which you need to own (Merriman), and then see which are the leaders and what they charge. A leader is not the one doing the best this month, but the ones doing the  best since the market high in 2000 or since 1995 or 1929.  Yes there are some! See who the honchos of these funds are and how long they have been there. Do your homework in depth for weeks or months. If you want to live decently when you're older, this is key. No one else is going to do it for you.

Use MSN. Use Google. Read a lot. Think a lot. Read my earlier stuff. I'll do more on this whole subject as it is extremely crucial unless you just won the PowerBall Lottery or turned out to be Warren Buffet's child. You can do this at any age, but the earlier the better.