May the source be with you, but remember the KISS principle ;-)
Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Fashionable Mutual Funds Mix Strategy

  1. Introduction
  2. Popular 401K investors delusions
  3. Fashionable mutual funds mix
  4. Follow the leader
  5. Naive siegelism
  6. "Financial alchemist" strategy
  7. Stable value only or "Depression might start tomorrow" strategy.
  8. Bonds-based strategy
  9. "Gold always shines bright"  and "Commodities rulez" strategies
  10. Lifecycle strategies
  11. Economic cycle based market timing
  12. Combination of lifetime strategies with market timing.
  13. Conclusions
  14. Webliography
  15. Old News

The name says it all. It's pretty much the selection of mutual funds that are most fashionable today. Classic example of 'fashionable stock mix" were technology overloaded 401K portfolios of pre 2001 days.  Another example was wide usage of Vanguard PRIMECAP which was one of the most popular mutual funds before dot-com bubble burst.  Right now foreign and emerging market stocks are often part of fashionable mix (often in 50/50 mix). People put all their money into high dividend paying stocks (and recently that used to mean by and large financial stocks) also probably can be put in this category despite the fact that the fundamental idea is sound but was distorted by subprime mess.

Commodities (typically oil or gold) overloaded portfolios probably also can probably be considered to be a fashion if bought in 2007 when they became a fashion. But that are rarely possible for 401K investors: few 401K investors have access to corresponding funds and ITFs.

The worst thing about this strategy is "panic" timing of the market as "fashionable mix" can abruptly change with change of the market conditions (dot-com bubble burst).  That often means selling and buying shares at least favorable prices which almost guarantee future underperformance of the portfolio.  As John Waggonner mentioned in one of his USA Today columns:


How the S&P 500 has fared in the 12 months following the largest outflows from stock funds, since 1984:
  Net outflow as a % of total assets S&P 500 gain 12 mos. later
October 1987 -4.1% 18.8%
July 2002 -1.9% 10.0%
November 1988 -1.6% 27.3%
August 1988 -1.6% 28.4%
August 1990 -1.2% 26.1%
Sources: Investment Company Institute, USA TODAY research
If you were one of the many mutual fund investors who bravely faced the August stock market declines, took your money and bravely fled, well, you're not alone. Investors yanked more money out of stock funds than they put in in August — the first time that's happened since June 2006.

The stock market, naturally, rallied sharply in September. Experts point to this phenomenon to show that mutual fund investors, en masse, tend to have remarkably bad timing at pinpointing market bottoms. They may have a point.

Wall Streeters, who consider themselves the smart money, are fond of pointing out the foibles of the general investing public. Joseph Kennedy, father of President John F. Kennedy, supposedly decided to sell his stocks before the 1929 stock market crash because even his shoeshine boy was offering stock tips. If even shoeshine boys are playing the market, he figured, it was time to head for the exit.

Over the years, Wall Streeters have found different ways to watch what the dumb money is doing. In theory, if you buy this reasoning, you'll make good money doing the opposite of what the public is doing. "Keep track of the masses," the saying went, "for they soon turn to asses."

Which brings us to mutual funds, which are the investment of choice for the average investor. The public has nearly $7 trillion invested in stock funds — $6.4 trillion invested in traditional stock funds and $479 billion in exchange traded stock funds. In total, mutual fund assets equal about one-third of the $19.6 trillion U.S. stock market. (Many funds invest in international stocks, so the amount of fund assets as a percentage of the U.S. market is somewhat lower than a third.)

In theory, you can glean some useful information about the stock market from the behavior of mutual fund investors. Because funds are a large source of new money for the stock market, you would assume that inflows should drive the market higher, and outflows should drive the market lower.

While going with the crowd is not altogether bad strategy abrupt withdrawals are and one simple way to improve the returns for this strategy might be limiting one time withdrawals or additions to, say, $1000 a week.


FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit exclusivly for research and educational purposes.   If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. 

ABUSE: IPs or network segments from which we detect a stream of probes might be blocked for no less then 90 days. Multiple types of probes increase this period.  


Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers :   Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism  : The Iron Law of Oligarchy : Libertarian Philosophy


War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda  : SE quotes : Language Design and Programming Quotes : Random IT-related quotesSomerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose BierceBernard Shaw : Mark Twain Quotes


Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law


Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOSProgramming Languages History : PL/1 : Simula 67 : C : History of GCC developmentScripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

Classic books:

The Peter Principle : Parkinson Law : 1984 : The Mythical Man-MonthHow to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

Most popular humor pages:

Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

The Last but not Least

Copyright © 1996-2016 by Dr. Nikolai Bezroukov. was created as a service to the UN Sustainable Development Networking Programme (SDNP) in the author free time. This document is an industrial compilation designed and created exclusively for educational use and is distributed under the Softpanorama Content License.

The site uses AdSense so you need to be aware of Google privacy policy. You you do not want to be tracked by Google please disable Javascript for this site. This site is perfectly usable without Javascript.

Original materials copyright belong to respective owners. Quotes are made for educational purposes only in compliance with the fair use doctrine.

FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to advance understanding of computer science, IT technology, economic, scientific, and social issues. We believe this constitutes a 'fair use' of any such copyrighted material as provided by section 107 of the US Copyright Law according to which such material can be distributed without profit exclusively for research and educational purposes.

This is a Spartan WHYFF (We Help You For Free) site written by people for whom English is not a native language. Grammar and spelling errors should be expected. The site contain some broken links as it develops like a living tree...

You can use PayPal to make a contribution, supporting development of this site and speed up access. In case is down you can use the at


The statements, views and opinions presented on this web page are those of the author (or referenced source) and are not endorsed by, nor do they necessarily reflect, the opinions of the author present and former employers, SDNP or any other organization the author may be associated with. We do not warrant the correctness of the information provided or its fitness for any purpose.

Last modified: September 12, 2017