All this does is protect large investment firms and screw the little guy. My advice: Boycott all Vanguard Funds.

Perhaps Guest would like to explain how holding down costs at Vanguard screws the little guy?

Guest: What this does is keep down transaction costs (as JC pointed out) and it makes the funds more tax efficient. Both are good for the little guy.

Here's a quick example:

I buy Vanguard fund at $20/share. One month later it goes to $50/share (I sell and pocket $30/share). The next week it drops back down to $20 on some scandal news. Oh wait, I can't buy it because of a 60 day rule.

Just replace the word "investors" with "consumers" and "Vanguard Funds" with "Dell PC" or "Wal-Mart Item" and ask yourself: Does it make sense to issue a policy that states, "Consumers won't be allowed to buy products from Dell/Wal-Mart online or via phone, fax, or wire if they've previously purchased items of that same type within the past 60 days.

Does this sound like Capitalism or more like "central planning?"

And do you REALLY believe Vanguard is doing this to help reduce fees for the consumer? Come on, I expect all you financially savvy people to be a little more skeptical of the "generosity" of mutual fund companies.

There is a reason why Bush wants so badly to change social security so you can dump money into the stock market: 80 million people will begin to withdraw money from the market in a few years. If we have another 9/11 attack then many will panic and would rather just sit on cash (I know I would).

This move by Vanguard is to keep people in the market and in these funds for as long as possible. Guess who's going to be left holding the bag?

Reducing Vanguard's bottom line is, of course, their objective. By reducing their bottom line, they'll also be reducing mine. Wanna buy at $20? Overnight a check... most rich folks are buy and hold investors, and there's little use in trying to time the market. As a Vanguard fund-holder I am fine with this.

Vanguard's unique ownership structure passes the cost savings on to their shareholders. Hot money (as described above) increases costs for the buy-n-hold crowd. Vanguard has no interest in catering to those who think they can time the market and sell out at 50 and buy back in weeks later at 20. (I wish I had your secret...)

For those who want to use Vanguard like that, they've introduced their VIPER ETF's. So if you want to trade Vanguard, do it that way. You can trade Vanguard to your hearts content until all your money is gone. Just stay out of the funds; which are designed for the serious investor.

JC

Also, the analogy doesn't follow.

So what's you're saying JC is that you want everyone who buys Vanguard funds to be similar minded to your views "the serious investor" so that essentially all the people who think the same will invest in Vanguard the same way.

And you expect to get rich this way...by doing what everyone else does the exact same way?

Well...thanks for the advice, I'll take a gamble and trade in and out as I please; yes it's much riskier but then again I look for bigger rewards than everyone else. I just simply don't want to be like everyone else - my goals are different at almost every fundamental level.

A review of Forbes richest people:
http://www.forbes.com/lists/2003/02/26/billionaireland.html

illustrates that those who are super rich (billionaires) are typically entrepreneurs, risk takers. those who are rich (millionaires) are the run of the mill folk.....it's all relative to what your goals are.....

Hey Guest,

JC pointed out to you that Vanguard has ETFs that act like their funds. These ETFs were set up so that people could ACTIVELY trade these instead of their mutual funds. Mutual funds are NOT setup to be actively traded. They are around so that people can dollar-cost-average over long periods of time for long-term goals such as retirement. If you actively trade mutual funds YOU should be penalized because you are increasing costs to run the fund for everybody else. If you are such a gambler why dont you start trading stocks, futures, currencies, options etc rather than a mutual fund. By the way, the "Oracle of Omaha" Buffet is in your list of billionaires. Do some research and find out how often he "actively trades"? The man is known to buy companies and hold them for decades.

JC isn't the one asking Vanguard mutual fund investors to buy-and-hold. Vanguard is asking that. Look, the bottom line here is that there all kinds of businesses that cater to all kinds of folks. Vanguard happens to cater primarily to buy-and-hold investors, while other companies may not. Vanguard is not doing their customers a disservice by protecting them against the costs associated with day traders churning their funds.

Guest,
I'm glad you readily acknowledge that what you're doing is gambling. Gamble away my friend...

Your goal is not to get rich, but "super-rich". Before you go any further, you would be wise to consider things like odds, risk, probability, etc.

Which would you shoot for:
7 figure portfolio (virtually certain)
8+ figure portfolio (slim chance with large probability of bagging groceries in retirement)

Most would choose the former over the latter. But hope (and greed) springs eternal.

By the way, a well diversified indexed portfolio of poorly correlated asset classes is NOT the way of the masses. It's a superior method with above average long-term returns.

JC

Well, i've never doubted that I'd be in the 7 figure portfolio way before I retire. I'm 33 and I have approximately $148k in annual income. This alone multiplied by 10 years is about $1.5 million. I live rather humbly (my only debt is a mortgage @ $600/month-loan is @3.25%). I have about 35k in an IRA, 30k in a 401k, 40k in home equity, 7k in Roth, 30k in cash savings. Not nearly as much as some of you "buy and hold" folk but then again, I like to gamble!

And for the record, I have just moved almost everything I have to cash. My "spidy sense" is tingling and it tells me the market is about to turn seriously south within the next 60 days. I could be wrong but then again so are most gamblers!

Guest, it sounds like you're in good shape. Given your circumstances, why do you relish risk again? At your age and with your assets, if you simply invest in a prudent portfolio and let compounding do its magic, you're done. Why take the chance of making a big mistake when early retirement is virtually certain given a more balanced approach to the markets?

Sure, with your discretionary income, you CAN take big risks in the market; but you have no NEED to.

One alternative is to take 10% of your portfolio and invest it as your 'mad money', so you'll have something to brag about at cocktail parties when you win. It gets the gamblers juices flowing and when you lose, you can quietly write off your losses. Then take the other 90% and put it in an "untouchable" portfolio designed for the long term. There you have the best of both worlds, and you'll still guarantee yourself success in the long run.

Just an idea,

JC

Why? Because life is a gamble. If 9/11 or the Tsunami or Katrina hasn't illustrated that I don't know what will. We are lucky to be alive on any given day! Fundamentally, we all need to ask ourselves some serious questions:

What will happen to the economy on another 9/11?
What will happen when baby boomers retire and draw greatly on government benefits (medicare, medicaid, social security, etc)?
What will happen if energy prices don't go back down and continue to rise?
What is my "plan B" if things go seriously wrong?

Under previous circumstances, I would be probably be doing exactly what you're doing but given the increasing potential for mayhem, I have to rethink my strategy. The new variables to the economy change the market dynamics greatly: terrorism, political divisions, natural disasters (ever increasing in cost), War, energy shortages, etc. We are living in a world of increasing chances for something to go wrong to the economy. I try to offset or "hedge" that uncertainty with gambling.

I can't be the only one. Sites like tradesports.com and hedgestreet are increasing becoming popular with everyone. Casino revenue is at an all time high (except for Louisiana) so I imagine many more are doing something similar - perhaps unconsciously.

I'm confused. Was this last post a joke or something? I don't get it. It makes no sense: "life is uncertain so I choose to gamble with my portfolio"?? This is not strategy. I'm at a loss for what that is. A fool and his money are soon parted...

JC

This fool is doing quite well.....My point is that many here are "assuming" that investment xyz is the best way to go because it has been so in the past.

I'm saying that past performance is no indicator of future results.....based on what is happening in the world today. Borrowing the Apple slogan: THINK DIFFERENT.