* Gary Denton ([EMAIL PROTECTED]) wrote: > If you read the top of the page you saw it was as of 12/31/04 a > horribly 2 weeks ago.
Gary, this is very simple. You are quoting results that include expenses from a time period when the expenses had not been lowered. In the time period since the expenses were lowered last year, and going forward, the expenses will be the figures I quoted. Your figures are outdated. If you invest in the fund now, you will get the expenses that I quoted. If you invested in the fund two years ago, the expenses would be about what you quoted. > It will be interesting to see if a fund that has to keep track of > millions of people making payroll donations of less than $100 a month > can match the expense ratios of funds that require a $1,000,000 > minimum investment. No, it won't be interesting. It is obvious that it will. It already occurs. You simply batch up the transactions into larger chunks. This is all very well understood by thousands of people in the industry who could run such a system. It is mostly a job of setting up a computer system and letting it batch the transactions and periodically do some trading. Only a fool would set up a system that does each transaction for each monthly contribution separately. > Creating a fund that exactly matches an index like the S&P 500 is more > expensive than one that is similar to the S&P 500 but can avoid some > of the trading required as Sauter and others have found. The lowest > expense ratios would give higher performance but claiming that you can > have negative expense ratios is clueless. Maybe in Gary-world, you believe anything you like. In the real world, there is basic algebra. Performance = Index Return minus net expenses P = I - X solve for X: X = I - P If the performance of the fund P is greater than the index return I, then you have a net negative expense X. > Unlike them I am not paid shills for the American Enterprise Institute > being paid to persuade people that privatized federal savings Your implication is that they falsified their work. Where are they wrong, specifically? Their work is well explained in a great deal of published literature. If they are wrong, someone should be able to point out exactly where and why. General hand waving, like the links you post, is worse than useless. It shows that you are not familiar with basic economics. Be specific. Where are they wrong? > Except that is not what the government is contemplating doing. The > amount P that the government plans to borrow is not the future > benefits amount but is the amount it is placing into the system in new > borrowing to replace diverted funds. The amount that the government would borrow is the amount that the payroll tax would be reduced by people that would divert some of their payroll tax to private accounts. So the present value of SS obligations, net of payroll taxes, increase by an amount P. But when those people divert some of their payroll tax, their future social security benefits will be decreased. In present value, that decrease will be chosen to equal P, because the SS system strives to be fair. So the net present value of future SS obligations decrease by P. Again, it is simple algebra: D + P - P = D No change in the net present value of future government obligations. -- Erik Reuter http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
