Stock Market People....A Question

[tanner12oz]

i have a moderate investment in the legg mason investors value o fund (SAIFX). generally it moves with the dow jones. couple cents up couple cents down. more up then down but today the dow went up 28 points and the fund i own dropped $1.80 cents. thats a very large swing for this fund. i browsed the net and didnt see any major news on the fund or imminent doom for the market.......so whats up with it today??? any ideas? im in for the long haul but i like to know whats going on....losing thousands of dollars in a day with no explanation isnt cool. anybody?

[Danzig]

if you're in it for the long haul, don't watch it every day! and certainly don't bail the first time you see a dip. the younger you are, the higher risk you should be taking now, high as you can stand with funds with the highest possible return. as you age, you change your holdings.
but i wouldn't put all in one fund either. we have several--love me some vanguard.

[ELA]

First, let me attach the disclaimer that I am in the financial services business and cannot give advice in this situation (compliance prohibits this). However, in this hypothetical situation there are several things you might want to look at.

First, most mutual funds declare and pay their dividends and capital gains in December. This is declared on a per share basis and has a direct correlation on share price. You can call the mutual fund company and ask them about this. You can also ask them about the price drop. Whoever you are talking to will tell you that they cannot give financial advice but they may have information as to why this "deviation" occured. Also, I do not know this fund specifically, however, are you sure it's a fund that is designed to track the Dow -- as opposed to some other index; for example the S&P 500. A value fund per se might not have it's index or benchmark as the Dow.

Second, December is the month that money managers make two specific moves (just two of many). One thing is that they start to take sell positions in order to recognize and realize their losses (the losses that have been "paper losses" or losses that have been harvested throughout the year). Tax loss harvesting is a very common business practice. One reason they might pulled a trigger on a losing position and might have done this now is due to the "wash" rule (where they sell a stock -- pre-Dec. 31 -- at a loss and then buy the same stock back, say for example, on Jan. 2). The second thing they do is start to make trades in order to "improve" performance (improve their performance on paper). That is probably not what happened here, but depending on the nuances, there might have been some "series" trades here or some offsetting trades (other trades to follow).

On another note, the only way you can be a successful investor is to be a long term investor. Unless you are trading options, commodities, a day trader, then be a long term "partner" or investor in the fund or the company. First, find an excellent one. Not a good one, but a great one. Warren Buffett once said that he wouldn't care if the stock market closed for 20 years. Read some of his stuff. Market timing doesn't work. Buy low and sell high doesn't work. Jumping on the hottest stock or asset class doesn't work. Anyway, this is a discussion for another thread, LOL.

Call the fund company. See what they say. It's going to be rhetoric and nonsense but that's the retail investment game, LOL.

Eric

[tanner12oz]

thanks for everyones info....i am in for the long haul and arent sacared by the big swing. like i said i just want to understand whats happening more. i guess im a lil inquisative. i thought about calling the fund manaager but it was late in the day and figured nobody would pick up. im gonna keep my eye on things the next couple days and maybe ill call to figure out what the situation is. thanks guys

[GenuineRisk]

Originally Posted by tanner12oz

thanks for everyones info....i am in for the long haul and arent sacared by the big swing. like i said i just want to understand whats happening more. i guess im a lil inquisative. i thought about calling the fund manaager but it was late in the day and figured nobody would pick up. im gonna keep my eye on things the next couple days and maybe ill call to figure out what the situation is. thanks guys

Tanner, you may be beyond this level of info, but I found "Mutual Funds for Dummies" really helpful when I reorganized my IRA (I was the moron who set it up as a general savings fund and then realized I needed to be more aggressive...). It helped me understand how to invest more wisely and, like ELA said, to think long term. And it was pretty entertaining reading on top of it.

[tanner12oz]

i actually have " investing for dummies" and ive looked through it a whole lot....didnt know there was a just mutual fund edition. ill definetly pick it up. those books seem to be able to break down any topic pretty well.

[SentToStud]

Originally Posted by ELA

On another note, the only way you can be a successful investor is to be a long term investor. Unless you are trading options, commodities, a day trader, then be a long term "partner" or investor in the fund or the company. First, find an excellent one. Not a good one, but a great one. Warren Buffett once said that he wouldn't care if the stock market closed for 20 years. Read some of his stuff. Market timing doesn't work. Buy low and sell high doesn't work. Jumping on the hottest stock or asset class doesn't work. Anyway, this is a discussion for another thread, LOL.

Call the fund company. See what they say. It's going to be rhetoric and nonsense but that's the retail investment game, LOL.

Eric

Are you saying it's never a good idea to buy a stock for trade purposes as opposed to strictly buy/hold? If you are, I disagree.

Are you also saying the correct way to take a sngle stock position is just to purchase the entire position all at once? If I'm looking to get a position of, say, $10,000 in a stock, I will NEVER buy the entire position at once. To me that's like saying this stock will never go below my purchase price again, ever. Things just don't work that way.

Anyway, just another man's thoughts. Couldn't agree more on the W. Buffet comments.

[GenuineRisk]

Originally Posted by SentToStud

Are you saying it's never a good idea to buy a stock for trade purposes as opposed to strictly buy/hold? If you are, I disagree.

Are you also saying the correct way to take a sngle stock position is just to purchase the entire position all at once? If I'm looking to get a position of, say, $10,000 in a stock, I will NEVER buy the entire position at once. To me that's like saying this stock will never go below my purchase price again, ever. Things just don't work that way.

Anyway, just another man's thoughts. Couldn't agree more on the W. Buffet comments.

STS, I think his post says, "UNLESS you are trading options, commodities, a day trader then be a long-term investor." He's in a value fund, which likely is not intended to be a short-term prospect. ELA didn't say anything about trading being a bad idea; just that most people who are investing (not trading) should plan to be in for the long haul.

I myself am a big fan of dollar-cost averaging for the small-time investor, like myself.

[gales0678]

Originally Posted by tanner12oz

i have a moderate investment in the legg mason investors value o fund (SAIFX). generally it moves with the dow jones. couple cents up couple cents down. more up then down but today the dow went up 28 points and the fund i own dropped $1.80 cents. thats a very large swing for this fund. i browsed the net and didnt see any major news on the fund or imminent doom for the market.......so whats up with it today??? any ideas? im in for the long haul but i like to know whats going on....losing thousands of dollars in a day with no explanation isnt cool. anybody?

Tanner - this dropped occured because of a dividend. You should see on your next statement

st div .2789/sh
lt div 1.5527/sh

If you set up to have div's automatically re-invested then you will have more shares on your next statement

Don't worry they didn't rob you , but, you will owe taxes on this distribution