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Investing Mistake #5: Sticking with mutual fund managers who still don’t “get it” that we’re in a new era of slow growth, crippled banks reluctant to lend and pinched consumers reluctant to borrow.
You don’t need me to tell you it has been a tough stretch for many mutual fund managers. Even some of the greats, with the finest
long-term track records, stumbled.And that’s precisely what makes it tricky to decide which mutual
funds to hang on to, and which you should cut loose. You don’t want to get rid of a fund if the manager is about to come
roaring back to glory. On the other hand, if recent bad performance reflects a fundamental problem that may linger for years,
it’s time to bail.Some funds, sad to say, just aren’t worth keeping. It’s not simply a matter of poor performance or high expenses. You should
also sell a fund if the manager is taking reckless risks: concentrating a huge percentage of the fund in one industry or “doubling
down” on stocks that have collapsed in price since the fund first bought them.I’m wary, too, of managers who refuse to acknowledge their mistakes. If a fund manager insists that his or her analysis of a
company that hurtled into bankruptcy was “fundamentally on target,” I have to question whether that person is capable of basic
critical thinking.Related Articles:
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