Mutual Funds Riskier Than Stocks?
A while back on our Mutual Funds discussion board, Fool Community member Josephus2 made the provocative suggestion that mutual funds are "riskier than stocks." I think his post offers a terrific opportunity to explore some interesting issues regarding mutual funds.
The post Here's how he explained his position:
1. Stops are not available on mutual funds:
As millions of investors realized when the internet bubble popped, mutual funds can lose you money just as quickly as individual stocks. Without stop-losses in place, you are risking unlimited losses. (Or at least down to zero)
2. Options are not available on mutual funds:
Buying protective Puts can insure a stock investment against loss. This strategy is especially valuable during earnings season when good stocks are destroyed by the market for no good reason.
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