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Show ber 15, 1996 The Salt Lake Tribune BUSINESS Sunday, ee INVESTING you to sell. If you have toolittle time or interest to monitor your funds, don’t be stunned when you wake up to lackluster gains. ‘It’s really not so bad.”” May- be not in a vacuum,butinvestors n to see how the numbers stack up. Take that Merriman fund (please). Over the past five years, its annualized return is CHARLES A. JAFFE & 42 percent, which some people Been Burned? Dump Your No-Good Fund You've been abused, battered, might be satisfied with if they never compared it to the 13.34 ‘Doily Mamas’ Knit to Survive Zimbabwean Women Travel Hundreds of Miles to Sell Wares percent of the Lipper Growth- Heralding the end of the month along the border with Zimbabwe, age or better and you are worrying needlessly. Then again, maybe not. ‘I'm waiting to get back to economic adjustments mandated by its Western creditors. At the same time, President Robert Mugabe has awarded himself and lawmakers a 100 percent salary rise. If Gonweis bitter, she doesn't showit. BY DUNCAN GUY THE ASSOCIATED PRESS MESSINA, South Africa — and-Income FundIndex. If you think a fund “could do a little better,” crunch the numbers. Maybe performanceis aver- “If you do something, it's OK. Butif you're lazy youwill not be happy,” she says. So the “doily mamas” head south — mostly around the end of South Africa has added a special train. their survival. These Zimbabwean women cross into South Africa every few weeks to shop for everything coach. Theytake turnssleeping so that someoneis always awake to your losses, you might be better off getting out now and putting paste to coffee powder, anything they can resell at home. Their Zimbabwe dollars are worth less than half the South African rand south of the Limpopo show, exceptthatit affects count- your money ona faster horse that River border,so they bring doilies farther north in Harare, Zimba- to sell. “My husband's dollars become worth less all the time,” said Daisy Gonwe, 30, who lost her supermarket job and becamea “doily mama”in 1994. “T leave my baby with him and cometo South Africa every three weeks,”she says. bwe's capital. funds, and do almostnothing with their existing investments,” says Don Phillips, president of Morningstar Inc. “Maybe they misjudged the fund or things changed, but there are a lot of peoplein terrible funds who must be waiting for a turnaround that simply is not coming.” There are fundsaplenty that havefallen and which is especially true if a fund is losing money ornot helpingit grow at a reasonablepace. @ ‘It can't stay bad forever.” Oh yes it can, This is “the gambler’s fallacy,” the belief thatif a coin flip comes up “heads” four straight times, there is either a hot streak or a reduced chance that it will happen again. In fact, each flip remains a 50-50 chance. Some funds are consistent los- ers for a reason, notably poor management, high expenses or lack of discipline. Not every fund turns around; a bad manageris as. heis to suddenly becomea genius. have never appeared capable of “My broker hasn’t said to sell.” A big reason for having a broker or financial adviser is for earning money — butstick with “fallen angels,” one-time high- flyers such as American Heritage thathad a goodyearor two before hitting the skids, Even more nefarious — and | picked it randomly from the dregs of the Lipper Analytical Services database — is a fund like Merriman Growth & Income, which makesa little money (emphasis on little), but has underperformed its peers by 50 percentsince 1991. The fund has $9 million in assets, so we can assume that shareholdersare asleepat the switch or love punishment, It is unreasonable — and dumb — to dump a fundafter a bad quarter or two. Manybig winners have poor years or yo-yo all around the charts. Living through a few years of consistently belowaverage performance is a completely different story. Thereis nothing to love about a bad mutualfund. Here are some excuses people use to stay with lousy funds. If you have ever used thesealibis, it’s time you started thinking divorce. “I'm too busy.” Inertia may be the biggest enemy of fund investors, Since most people dislike change and hate to own up to making mistakes, bad investments can sit in a portfolio for years. A fund can be consistently awful without putting upthe cataclysmic numbers that would spur emotional discipline, the hand- holding needed to stay put and see the long view when the current market makes youjittery. But that doesn’t mean abdicating the selection processor relying entirely on the adviser. If a broker-sold fund hasn't produced results, ask why;if you get neither watch for thieves during the 300- mile trip from the border to Johannesburg. For many, the journey starts by bus 360 miles But the ““doily mamas’ generate significant income for South Africa's railways as well as for there before. Now I even have South African friends to stay with. I pay them 30 rand [$7] for board.” South African customsofficials Messina, a border town where advertisements read ‘Zimbabwe Hawkers Welcome.” Hendrik Roelofsen, adviser for charge the “‘doily mamas” import duties on their knitted goods. regional trade development with the U.N. International Trade Cen- ter, says the ‘‘doily mamas” represent entrepreneurship to the highest degree. even whencustomsofficials don’t countevery doily. Can't get groups to make decisions ? WE CAN! Let us teach you how! Come to our one-day seminar on facilitation gkills. Learn how to get your team to identify the ISSUE,brainstorm solutions, and get AGREEMENTon ACTION plans! Get buy-in, Onthis trip, the train conductor counts 873 “doily mamas.” The other, special train, moving past giant baobab trees and mopani bushes glowing copperin the winter sun, carries 1,800. The end of the month, when South African customers have just been paid and havea little extra cash for a knitted doily or tablecloth,is the time to travel. The family endures separation andthe hardshipof suchtravel to make ends meet, or nearly, in Zimbabwe. Gonwe earns about 180 rand ($40) a month in her travels, Unemploymenthas rocketed to 40 percent in Zimbabwe, where the state has cut spending in an tool Satisfactionguarnted! Only $195. Next seminar dates: October 9 & 10 Send your name, company name, address, & phone # for more information (fax at 292ill rr entire career! 0378), The seasons have a say in what the “doily mamas” take home. This winter it’s blankets. Eunice Manika, a widow, says a type known as “‘twe in ones” are in fashion. They sport a different Deep Space Technology Company P.O, Box 802 -Bountiful, UT 84011 - (B01) 292-1307 color on eachside. effort to deal with its $4 billion foreign-debt burden and make Manika’s selling turf is in OfficeMax'z viser. @ ‘Everything looksfine in the fund's reports.” Of course it does. Whena fundis terminally mediocre,its manager or companypresident puts the shine on the sewage. If the fund's statements about prospects and performance have never appeared in your account statements, get nervous. @ “It had a good ranking from Morningstar.” This is akin to, “I foundit on the cover of Money (or any other personal-finance maga- zine).” Rankings andarticles are snapshots. While past performanceis no guaranteeof future returns, a fund’s glory days could be overif years have passed and you have not gotten a sniff of its gloriouspast. Charles A. Jaffe is mutual funds columnist at The Boston Globe. He can be reached by email at jaffe@globe.com or at The Boston Globe, Box 2378, Bos- $398”Value! Cetadicgd Lecace IBM P1I33MHz Processor * IBM 6x86P 133 processor * 14.4K fax modem © Quad Speed CD-ROMdrive * Windows95installed * 1.0GB (1000MB) harddrive * 1 yearlimited warranty Ty Buy this computer and receive: | Canon FREE! BJC-210 ColorPrinter ton, MA 02107-2378. DiGiLAL ViDEO a SYMPOSIUM ssaal 1410-2712 Model # US Tech 993180 1402-6181 (Value $149.00) 129 FREE: 14” (13, 1” viewable) .28mm Color Monitor Panasonic Broadcast & Television Systems Company cordially invites you to attend a China. Sometimes South Africans claim they are taking their jobs: answers noralternatives, it may be time to dumpthe fund and ad- ieaiePoesia a try from as far as Senegal and farther on from Johannesburg. “I got to know it by traveling around there a couple of years ago,” she says. “I had never been likely to pick more bad stocks as can't get up. Investors avoid total losers — like the Steadman Funds, which from mugs to door frames, tooth- (Value $249.00) 1401-1632 00 OfficeMax Everyday Low Price ‘One per customer. Limited to stock on hand, May not be combined with previous offers or purchases. ‘96 sponsored by TV Specialists, Inc to be held Tuesday September 24th 1996 10:30 am to 12:00pm or 9:00 pm to 3:30 pm at The Salt Lake Little America Hotel Technology Overview, Comparisons & Demonstrations including Postbox Version 2.0 Real-time Non-Linear Workstation DVCPRO Digital Camcorders and VTR's Professional ENG & EFP Video Production D-3,D-5 Uncompressed Digital Video for Broadcast Panasonic Broadcast & Telmasion Syste Company . Prints 4 fomer minute |r sofwarepack ncudiny SMT errew nie Navigator |Mesaee 20 a150" esaee* Inont Rebate Modei # LaserJet 5LX Ust Price $599.00 1403-6651 $429%... 2S how, things will change. “People focus on picking new speeds yourrecovery. It takes guts to acknowledgeinvestment mistakes. Most people have more guts than money, Queenstown, which is 400 miles Theysit packed like sardines on benches in a no-frills third-class wait forever. Even if you recoup less people. There arebillions of dollars in mutual funds notable only for mediocrity anda consistent ability to underperform peers and disappoint shareholders. And yet many unhappy shareholders hang on, ignoring the problems or hoping that, some- ca are a contentious issue. Since the borders opened up with the end of apartheid, foreign peddlers have flocked into the coun- Manika says she has to pay 80 the month andin ever-increasing . rand ($18), which is nearly double numbers already so large that her train fare to Johannesburg, hundreds of “‘doily mamas” jam the train rolling south, knitting scraps of cloth that are key to taken advantage of and yet you put up with the sameawfultreatne ear after year. lay's topic: Bad funds and theinvestors who love them. 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