| Show 4P The Salt Lake Tribune Sunday February 26 1989 When All Is Said and Done Best to Forget commodities Investing NEW YORK — If you're thinking of buying a limited partnership that initests in commodities the crooks in Chicago's commodity pits are only a little piece of your problem Without doubt it's embittering to iearn that your partnership — also known as a commodities fund — ti?esn't always get fair prices on its trades A two-yeinvestigation has tutned up strong evidence that some dishonest brokers are shaving their customers' orders by fractions of a cent and pocketing the profit Those fractions spread over thousands of trades add up to a lot of champagne and BMWs for Chicago's gods of Mammon and losses for commodities investors But the cops will clean that up The larger — and more intractable — scandal lies in the entirely legal deceptions that surround the selling of commodities funds in the first place Brokerage firms mislead you as a matter of course with the full approval of the market's regulators high-livin- r777"7"1 The problems lie in the sales brochures and prospectuses for new commodities funds They "disclose" the portfolio manager's past performance which is never anything less than spectacular Gains may be claimed of 50 60 even 70 percent a year But those astonishing track records can be a clever form of fiction They're not wrong exactly But they're biased and misleading They greatly exaggerate the manager's chance of success For proof I give you a study by three New York professors Edwin Elton and Martin Gruber of New York University's Graduate School of Business and Joel Rentzler of the Baruch College of the City University of New York They took 77 new commodity funds and compared the managers' past performance with how well the funds actually did in practice The verdict: disaster As a group the funds earned less g ii - I 'fir I Staying p Ahead I By Jane Bryant Quinn of the rates of return the prospectuses Between 1979 to 1985 investors earned an avf of a pererage of less than centage point per month That's a far cry from the implied 50 or 60 percent return The professors identified two main forms of guile: (1) The law of averages says that in any period some of the country's 2000 commodity managers will do spectacularly well for their private clients Theyre not geniuses they're just randomly lucky At the height of their streak they're picked to run public commodities funds But soon than shown one-tent- h in one-hal- r i 1 ow much it 7 i l" 77FREto " I :: :: ::: ' 15g( --- -' i i:::- ::::::s434 :::::::::::0:: '' Mid Insured 1:s'10: To $100000 : 4 MONTH CERTIFICATE OF DEPOSIT ‘k 44iA44: :: :: : :::: ':ki2:::::::' ::: Xi ''''N i minimum $IAM from --VW campormamt deify I jr :!!''1::::: "1110-- --- -- - Ammo! 4:::Z:::::::'::i 3 DAILY " Ouork out hignet toea on 6 12 24 36 46 mu end Dm to hiqh rate CrInck DAILY SAVINGS Annual Yid doily hem compoundoO Add or 6767 A quick announcement from Range Rover 000 -- ' 4( nun - I9S9 Range Rover accelerates faster than ever CORR in and see for yourself It shouldn't take tong : tailititl4iir r - i r of :::111 OUR 1 I ' tc 'HOME' H ik I ' theluts Pleential Steeds Sege CALL 487-08- 11 UM" For more complete information incliuding management fees and expenses contact Farm Bureau Mutual Funds for a prospectus so that you may read it carefully before you invest or send money Etf ' !-- C!) 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KIMMilll 455 EAST SOUTH TEMPLE iP&SSIIIPlait - los 13 41---:ta- 12""")" Group I II III Compatible High Speed — Reliable Sales & Service MOM FILITIIIU DALE CARNEGIE TRAININW t Ix OtImiuniat will 4 ILO I 1 Given the scandals the deception' the enormous fees the low average returns and the small chance of' making money the three professors offer this advice: Forget commodity-fund- s Instead put your money safe government securities "Dale Carnegie Course' Dale Carnegie Sales Course!) and Dale Carnegie Management Seminars Recognized for College Transfer Credit by the American Council on Education" CUSSES NOW FORMING For Information call: fictsata ' profit zero-coupo- n - II a in Eervk I on your entire investment making it even harder to make Effective Speaking - Human Relations - Self Confidence - Memory Training - Selling Your Ideas - Reduce Worry and Tension CI:icor:r swift tiOrtv are charged DALE CARNEGIEeCOURSE 363-529- SO aged Account Reports told my associate Virginia Wilson "They look at it as a cdtt of doing business" As professionals they are less likely to be bamboozled than individual investors because they know what prices they ought be be getting The funds worry far more about their reputation as a chancy investment Their latest gambit: Guarantees In a guaranteed fund about 35 percent of your money goes into The rest commodity speculation bond or a goes into a letter of credit that will return your principal after five years But fees (which can run to 20 percent for administration and transaction costs) their performance reverts to average and their funds poop out (2) In the prospectus managers are required to show their track record for at least the past three years But they can show more if they want to That allows them to pick the time period that creates the most attractive record The reported Say the professors data is misleading as a basis for an investment decision" Meanwhile back in the pits the funds aren't rising up in alarm about the Chicago scandal "They know these things go on from time to time" Morton Baratz editor of Man ! 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No uldit mod depositdlowed RegulationA require Effect ine annual mid isLi TM trill Jodi inn inierest remain on depoit it current rate for ur it ()tiering rde sutilei iiichilnizie v it hold mill" si is indfiiiti " tt :rosstandg 'The bank you could actually like ‘ GREAT WESTERN ( WM VcrnJ hnt t and uan I A ( ircat VAtern inanua) I (1( mpany NIcintct I PIC Z II I fat ()() ()(it11 t1t x ( :t 111:1111n(11)t 4( '1 1:( it1111c )!(1(11 it )1ItJt 2 tI -- '04 FDIC I I rt Office: Cottonwood Office! Ivy Sugarhouse Office: rdi 3:7I19601 2262 )0 Sith 3ro 9titio Fashion Place Office Isi Fdsi 6100:smith $() 81 tenter too kii7(o CrossLand Savings FSII is a federally chartered savings hank with assets in excess of $15 billion rqi - Member FSLIC Other office natumwirle Lerv ice mark of CroLand SAvinw Sh 19s9 S rewtored 1 |
