Joshua Morgan Brown's Answers and Guides

I think penny stocks are fantastic for the following:

1. Capital Loss generation
2. Promoters and "investor relations firms" who represent the companies
3. People who live far away from a store that sells lotto tickets
4. Anyone who finds themself in some type of Brewster's Millions type scenario where they have to lose a certain amount of money in order to win an even larger amount of money
5. Pump and Dump scammers

Not important at all. The star system at Morningstar is predicated on how the fund has done historically. You’re probably not interested in betting on a horse that ran the Kentucky Derby in 2011, right? Morningstar is working on improving its ratings system and has begun incorporating more forward-looking criteria, but it’s a work in progress. As for fees, they are one of the investor’s natural predators along with taxes. There are very few funds in this world, 5 star or otherwise, that are worth paying up for.

The "Golden Number" of mutual funds you should invest in is zero.

The mutual fund is an inferior product utilizing the cutting edge of post-Depression Era technology (the Investment Company Act of 1940 created the rules).

The few remaining mutual funds I will use have active managers that I trust through mutipe market cycles because they can "go anywhere" - when these managers inevitably launch new funds in the active ETF wrapper, I fully expect to convert these holdings.

The best site to use for this sort of question is XTF.com - they allow one to compare multiple ETFs at once across the most important metrics (like internal expenses, for example).

As a generalization, for a single currency ETF like FXA (the Aussie Dollar Index) you can expect to pay between 35 and 50 basis points (or .35 to .5%). A currency ETF involving the short side will cost you closer to 90 basis points (almost a full percent).

Go to the following link and select "currency" from the asset class menu followed by "single currency" for more detail:

http://xtf.com/Research/

Here comes a mouthful...

The servicing of a loan may be sold by the original lender to another firm who will send borrower their monthly statements (aka 'service' the loan). This must be disclosed before the loan closes, and it also must be disclosed every time servicing is transferred. Sample disclosure attached. As for whether the underlying loan (which is different from the servicing) has been sold by the servicer, borrowers can check if Fannie/Freddie own their loan here: http://www.fanniemae.com/loanlookup/, https://ww3.freddiemac.com/corporate/.

Special government-led refinance programs for distressed borrowers mostly require that Fannie/Freddie own the underlying loan regardless of which firm services the loan. If you're trying to get a loan modification or refinance and it doesn't show up on the Fannie/Freddie lists, then you must ask your servicer if they can help you directly.

If your advisor puts you in any mutual fund with a symbol ending in the letters “ax” or “bx”...he might not be a fiduciary.

If your advisor blurts out something about annuities within your first two meetings...he might not be a fiduciary.

If your advisor is really excited to get you involved with his trade-intensive “covered-call strategy”...he might not be a fiduciary.

If your advisor wears loafers without socks and black suits with white pinstripes as thick as highway dividers...he might not be a fiduciary.

The first question you’ll want to ask is where he or she sees themselves on the spectrum between planner and asset manager. Look for someone who positions his or her expertise as being somewhere in the middle. The hardcore asset manager types will not be focused on performance and uninterested in your personal situation while the planning-only types will be clueless about what’s happening in the markets from day to day, almost by design.

An RIA is a Registered Investment Advisory firm. A person cannot be an RIA or refer to himself or herself as one. Employees and principles of an RIA firm are known as Investment Advisor Representatives (IARs) although the two terms are often used interchangeably in the common parlance.

There will always be a crisis - apparent or temporarily hidden. Uncertainty is the permanent condition of the world and the markets themselves. In contrast, think about the investments you might have made in times of confidence and certainty - 1999 comes to mind, so does 2007. How would the investments you made then look now?

Periods of uncertainty are no fun, but periods of certainty are an even more dangerous time for getting overly confident.

A few thoughts on this topic:

First, in most cases you should be seeking out passive funds, whether they are cap-weighted traditional index products or fundamentally-weighted "smart" indexes - like dividend or earnings quality, etc. These come in the form of ETFs so the internal cost should be under 70 basis points for the most part and under 50 basis points in many cases.

For areas in which you seek more active management, you should keep the folloiwng in mind: There is no metric that's been found to consistently predict good performance for any mutual fund type more than low fees. Low costs are the first determinant you should consider, above all other factors at first. Once you've narrowed the category down thusly, then you can do yiour homework on the managers, the portfolio etc.

Russ Kinnell of Morningstar documents this phenomenon here:

"How Expense Ratios Performed If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds. To see the results, click here.

Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile.

For example, the cheapest quintile from 2005 in domestic equity returned an annualized 3.35% versus 2.02% for the most expensive quintile over the ensuing five years. The gap was similar in other categories such as taxable bond, where cheap funds returned 5.11% versus 3.82% for pricey funds. That same relationship held up dependably in the other time periods we measured. For 2008, the cheapest quintile of balanced funds lost 0.04% over the next two years, while the most expensive shed 1.13%."

Source:

http://news.morningstar.com/articlenet/HtmlTemplate/PrintArticle.htm?time=2053039