Quote:
Originally Posted by johnny_d
According to the knowledge that I have, buying mutual funds is not a good advice. It is because it is better to sell and buy quickly (trade), instead of investing long-term, at least according to the method / system, that I've used. On the other hand, people like Warren Buffet, seem to invest long term too... With what I am talking about, you select the best / stronger stocks, buy them, and get out, in case you start losing money, so you never lose more than 5 or 10% of the price paid. It is very likely to happen with mutual funds.
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Your answer is a very simpleton answer about mutual funds... First there are 3 types of mutual funds on the market (OPEN Ended, Close Ended Funds, and Exchange-Traded Funds {ETFs}). Open End funds are usually for long term investors who have a 401k or another retirement account. Open End funds are not liquid (and so there not used for day trading). On the other hand closed end funds are leveraged mutual funds that are liquid and trade at a premium or discount to net asset value. Also ETFs are also liquid and can be day traded.
The advantage of mutual funds over stocks is there diversified and so there is 0% chance that a mutual fund goes out of business since its made of of 20+ underlying assets. An individual stock can go to $0 if there is some bad news (IE radio shack filing for bankruptcy as an example).