So When Do You Sell, Anyway?
Although the game is to buy low and sell high, it's really hard to know what's low and what's high because those numbers are relative. We're going through a rough market right now, and some people are selling out of panic. That's the wrong thing to do. But it may be a good idea to get out of mutual funds that are underperforming by a big margin in a bad market. How do you tell which is which?
Doug Fabian, a financial planner and president of Fabian Wealth Strategies in Costa Mesa, Calif., wonders why so many bad mutual fund managers are allowed to stick around. Each quarter, he publishes his Lemon List (www.mutualfundlemonlist.com), which is a list of mutual funds that have underperformed their peer groups for the last 12, 36, and 60 months. The goal is to separate out funds that are going through a temporary rough patch from those that are posting bad numbers year after year. "If you turned up on the Lemon List, then you didn't have a bad quarter," he says.
Doug Fabian, a financial planner and president of Fabian Wealth Strategies in Costa Mesa, Calif., wonders why so many bad mutual fund managers are allowed to stick around. Each quarter, he publishes his Lemon List (www.mutualfundlemonlist.com), which is a list of mutual funds that have underperformed their peer groups for the last 12, 36, and 60 months. The goal is to separate out funds that are going through a temporary rough patch from those that are posting bad numbers year after year. "If you turned up on the Lemon List, then you didn't have a bad quarter," he says.
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