Money Magazine Stocks 2010
How to approach major magazines’ completely different lists of recommended mutual funds?
In deciding what mutual funds to invest in, I checked out Forbes, Kiplinger’s, and Money magazine’s lists of recommended funds and was surprised to discover that they had virtually no funds in common. To make matters worse, even when there was overlap there were some distinct differences, e.g. Forbes gives CGM Focus fund a top rating in down markets while Kiplinger describes the fund as highly risky and volatile. Why would their recommendations be so different? And perhaps more importantly, whose list do you think is the most reliable (and why)?
Compare:
http://www.forbes.com/forbes/2010/0208/investing-mutual-funds-stocks-cmg-focus-honor-roll.html
http://money.cnn.com/magazines/moneymag/bestfunds/2010/
http://www.kiplinger.com/investing/funds/kip25/tables/index.php?kipad_id=48
ignore them all.
Personally, I say go with index funds and retirement date portfolio funds exclusively. Everything else is a waste of your time for exactly the reason your question is pointing to.
As an advisor, I tell people who insist (or have no choice) on picking something else, I have four rules:
(1) Never pick loaded funds.
(2) Never use one year returns — focus on 3-5-10 year returns.
(3) Always compare returns and expenses to both the index and several index based mutual funds of the same kind.
(4) Compare the volatility of a particular fund to the volatility of the index and ask if you can stand it for the long run. Most people under perform the funds they actually invest in because the buy near the highs and sell near the lows.
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