Investing With Two Middle Fingers Pt.2

In a Past Life:

I used to invest with a very well known mutual fund company*. Let me tell you, if you want glitz & glamor and feel-good investing, these guys have it! A dazzling website, an office overlooking Central Park, and a small army of mangers, analysts, lawyers, etc. I thought they would make me rich; after all, their founder was on CNBC all the time talking about the stock market and how he knew what was going to happen next. I used to get quarterly reports that were eye-catching booklets full of mind-blowing information, and their annual report was a beautifully printed tome telling me in great detail how well things were going, even when they weren’t going so well…

Every year I’d get an invitation to their “annual conference” held at The Waldorf-Astoria or The Metropolitan Opera House in New York City. While the invitation said “conference” it looked more like a party to me, with performers like Stevie Wonder, Elton John, Sting, Rod Stewart, Neil Diamond, and Celine Dion. Holy Smokes!

At first this company made me feel special and like I was a part of an elite group of like-minded investors all getting rich together and rubbing elbows with celebrities in NYC. Later I began to wonder who was footing the bill for this shindig – and I soon began to worry that it might be me… Then I read one day in Vanity Fair (yes, I subscribe…) where this company’s founder was buying an estate in the Hamptons worth over $100 Million! What in the heck? I sold my funds…

Let me tell you something – if you look around a poker table and you can’t spot the rube, then you my friend are the rube. If you find yourself in this predicament then it is time to change the game.

bankersBe very careful around these guys © Ralph Steadman used while awaiting permission


Recently, with a new and highly skeptical view of retail investing, I went back to this company’s website to take a peak at how things were going. I’d like to use this as a real-world example of getting skay-rude (That’s Texan for screwed). Here I’ll took a look at their least expensive fund offering to see what we’d get for our money – besides Celine Dion pounding her chest on the high notes…

Performance (?):

I’ll call their fund SPNDY (because it is quite spendy). Its benchmark is the Russell 1000 Growth Index and its expense ratio is 1.12% (that is spendy). I can easily track this same index with the Blackrock Russell 1000 Growth Index Fund (BRGNX) for a paltry 0.06% expense ratio (but I’m not sure who performs at Blackrock parties). So for a cost 1.12% per year with SPNDY (almost 19 times the cost), what do I get for my money with the party animals versus the more frugal Blackrock alternative? Let’s take a look at the past 10 years of performance had we invested $10,000 in each fund**:

fund                             begin             yrs         fees               end                  %ret

SPNDY                         $10,000            10          $1,425        $15,004                5.32

BRGNX                       $10,000            10          $     94        $21,640               8.09

Let this soak in for a moment. With SPNDY I pay $1,400 in fees over 10 years and I lag the target index by 3 percentage points? To simply track the index and forego the caviar, I pay just $94 over 10 years and end up with almost $7,000 more in my account with Blackrock. Folks, this is retail investing in real life. Finding rubes like us to put our hard-earned money into expensive products that under perform the market with no consequence.

Morningstar Reporting somehow generously gives SPNDY 3-Stars out of a possible 5, but I unapologetically give it Two Middle Fingers. I would urge you – one thing to learn from my blog – at least learn to do very basic research, simple cost analysis, and simple performance analysis. Don’t be the rube at the the table…

double birds
Even Mr. Rogers knows this is not neighborly…

What’s Next?

Even worse than buying expensive mutual funds like I outlined above would be handing your money to a retail investment advisor who will “advise” you by charging you 1.5% a year, but the extent of his service will be putting your money into poor-performing investment products, like SPNDY, that are going to charge you another 1.12% per year on top of that. What’s he going to do, put you in simple and inexpensive index funds? No… He knows you’ll ask why he’s doing that when you can do it yourself and save the 1.5%.

I’ll say it again; the best “first move” you can make is to buy an S&P500 Index Fund. You’ll pay fees of around .02% and outperform most every money manager in existence who is investing in large-cap equities over the long haul. If you have an investment horizon of 20 years or more, buy it, hold it, and invest in it monthly. There are dozens of reasons you’ll be able to think of not to do it (fear, trepidation, self-doubt, crashes, downturns, war, Trump, Putin, the wall, solar flares, etc.), but if you want to set yourself up for your future, that’s reason enough for me to start today!

Now that you’re in control of your money and it is safe from the greedy hands of investment bankers and the Wall St. money-grab, you’ll have the funds to go out and buy an over-priced six’er of PBR, crank up some Tom Petty on your cassette deck, and sit back and really enjoy the good life. No one wants to wear a monkey-suit to a Celine Dion concert anyway…


Coming up next:

Next blog – I’m debating whether to talk about gold or to talk about bonds – kind of a “safety theme hour”. I do take requests, but we’re done with Celine Dion.

Thanks for reading, leave a comment!

Be Well,


* True story with real numbers but I’ve chosen not to name the fund.
** Computations performed at &


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