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When you're choosing your 401K investment safe and reliable come to mind right well before you make your next move you may want to listen to our next guest.
He has three funds that could be killing yes kill it you're four what gay Jefferies is editor of investor place dot com.
-- -- Jeff let's start with the auto sector because last week there was some good news towards the end of the week with Ford GM particularly.
Look like the golden child everywhere is talking about -- turned -- -- etc.
But -- a bad times may be -- for auto sectors are particularly for Fidelity's select automotive explain.
Yeah and it to declare all these funds that we're talking on here -- -- specific ones but generally for most borrowing K investors I think there's lessons Muller from all -- -- -- just because you don't know on these three.
Doesn't mean -- reversing cooking up an omelet -- your for a long guy right so.
The Fidelity select got a lot I don't like number one -- select -- are are -- select sector funds in general pretty bad idea for a lot of investors were long term.
A sector back can be kind of a swing trade short term.
I think in the short term point Bob I think auto is -- hitting a rough spot like you said yen had really good earnings but if you look at the details.
They didn't turn a profit at all the European operation that in turn a profit in Latin America.
The other growth came from North America and as you and I don't know it's not like that growth is to allow Iraq is basically a rebound from the bottom but -- -- a lot of concern about China right now you an auto makers are betting big.
President would have killed your 401K.
If had you had it in 2009 when it was -- a 122%.
And that's been a forward to 2010 up 46%.
But you're saying now shed it if it's in your portfolio for your 41 -- Yes exactly -- -- -- sector plays a gang of 401K -- you're looking towards retirement you looking towards long term it's vastly different than a swing traders be looking to stay up -- rising -- -- financials that's vastly different than trying to come a long term retirement.
That's right your next one is vanguard diversity it diverse equity fund I I would look at Damgaard diversified to say don't you want a diversified equity fund.
Yeah on the surface itself like it's a great Nam -- everybody while on -- but the problem is that it's a fund of funds investment meaning it's mutual fund comprised of other mutual funds.
So you're gonna pay decent amount of expenses there because all of managers got to eat in generally that people shouldn't buy funds of funds in my opinion because accounted dilute the strategy -- -- -- -- cooks in the kitchen.
This particular fund has twenty different managers for about a half dozen different funds.
And actually if you look at the details all the top holdings they sure a lot of the same positions they top -- in the apples we have to wonder why -- any extra expense of all of these funds when you can just fine -- -- get that same kind of pop for your 401K I mean a generally I don't like the fund of funds model but this guy and one is particularly galling because I think when he managers is just wait and that look at.
Same for layer on layer of management to as you go so in the end and I are good don't I have secretary is now on have a nice cars and I shouldn't be paying for that are right -- -- -- let's talk Oppenheimer gold say they're better ways to hedge against inflation of course gold is.
Is the classic inflation play but.
What if if I don't like gold as an inflation hedge what else could I use.
Well here's the thing is that again we think about your 401K thing about retirement investing is longer term and gold is a very volatile investment.
You know people shouldn't buy into the hype about all these pawn shops that are going after gold in the commercials on TV gold kind of waxes and wanes.
And the last gold bubble in the 1980s it -- 65%.
In just a couple years and we're kind of just getting back to square so if you figure your long term investor you don't wanna play the volatility too much your 40 okay.
I believe -- -- inflation -- but that's like you have a good diversified portfolio with some value investments made some oil stocks there's ways to play.
The inflationary environment until it kind of passes out and in your manager -- -- -- For the index fund kind of takes you back to square so I believe there's waste -- -- inflation long term.
That are a little bit safer for your portfolio in gold because it is very volatile -- -- got a 401K investors don't understand that -- the hype right now the returns of that but it can swing the other way it is.
-- justice is just a great segment because it just shows that one dumb decision can actually kill whatever gains meager gains depending on the year that you get your 401K.
How do you spot a problem child fund.
Well I mean.
You gotta be very careful not to look at the short term because the gold as a perfect example I -- last year gold lost something like 30% for most gold funds and the one that I pointed -- it it's it's not alone.
Also the very high expense ratio of about 2% so if your expense I would -- -- Very very high -- I'm kind of undermined it well we all know that a lot of managers don't even be either they're -- you know each the benchmark -- -- -- -- so why would you not just go for a lower cost find that doesn't cost as much money to basically it's the same performance I think expense ratio is very important to look at.
With over 1% you definitely have a lot of warning -- there you have to look at the long term performance the tenure of the manager for managers only been there for a year to.
Or if you have a big pop of say 20% of single year I mean that's all nice but gold had a big -- -- and gold fell off.
Auto had a good run and that it fell off that thing is about 41 K retirement investing long you're looking for years not months and if you wanna have a long term growth in your in your retirement -- that you don't -- reaper coming out yeah yeah they sure you look at the big picture long tenure for your manager.
And I think at least a five year return -- more have to be a beating the market but magnitude in order for -- going to be.
But if you don't have this guy's phone -- if you don't have Jeff's private phone number you can always go to investor place dot com because Jeff I would like to call you next time I'm gonna move my assets in my face reality I -- attitude and that I don't -- -- -- gonna go to investor place dot com which is how you all can take advantage.
Of -- Jeff thank you very much.
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