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In perfect Mutual Fund your money is not spread too thin. For example, putting $5,000.00 into, lets say, S&P 500 Index Fund, you would end up owning around $10.00 worth of 500 different companies. Other than obvious fact that your money is being spread too thin, any dividends from companies in Index Fund could possibly be eaten up by management’s operating expenses, advertising fees and whatever other Mutual Fund fees (they’re called ‘hidden fees’)are involved.
In perfect Mutual Fund valuation of a stock is based on how often a company raises its dividend and company’s stock appreciation in market place for past eight years. It is this valuation that earns it its place in perfect Mutual Fund. The perfect Mutual Fund ignores all other elaborate techniques of security analysis to find value in a stock. I guess you could call it a Jerry Maguire, ‘show me money’ security analysis. (Also, in my opinion, too many people spend too much time looking at technical charts trying to predict what a stock or stock market is going to do tomorrow. Just because thousands of people on Wall Street make a living doing ‘technical analysis’ doesn’t mean you have too jump off a building, too.)
In perfect Mutual Fund it is belief that dividend is one measure a company cannot fudge. The money has to be there to pay shareholder. The earnings, P/E ratio (trailing or forward), price to sales etc. will all fall into place if company still has enough earnings every year to continue raising its dividend. The perfect Mutual Fund assumes that if a company, for example, that has a history of raising its dividend for past 35 consecutive years; it must be doing something right!
In perfect Mutual Fund dividends from companies are also a safety factor that will put a bottom (support) on a stock. The dividend yield/return will keep price of a stock from falling too far, in case of a severe drop in stock market. And, of course, in perfect Mutual Fund, lower stock prices accelerate your income.
The perfect Mutual Fund is real!
How to begin and invest in your own perfect Mutual Fund can be found in my book ‘The Stockopoly Plan’. Excerpts from book can be found at www.thestockopolyplan.com
An individual investor with almost 40 years of experience and passion for the stock market. Author of the book ‘The Stockopoly Plan’, soon to be released by American Book Publishing.