I agree with you that the average investor has not the skills/expereince to engage in global equity markets, not without any assistance.

Risk really depends on the knowledge you have and the success rate of your investments and your overall strategy.

When t comes to ROI then that is once again up to the individual investor and what the investor accepts as good.

Persoanlly I think it is very sad that you only get 12%-15% and that you don't even expect that, in my opinion, very low ROI every year. That is one problem with mutual funds but then if you are happy with that then that is great for you.

It meets your investment targets and I don't see any reason for anyone who is happy with the investments in the portfolio to make adjustments.

Personally, I wouldn't be happy with that performance. If you would have 12%-15% each quarter then that would be a different story.

Before you say it is not possible let me tell you it is. It may be rare and only a very few, probably unknown companies and selected individual investors are capable of those returns.

All I am saying it is possible.

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It is not smart to play it safe but it is safe to play it smart.

I'm definitely not arguing whether it is possible, because I've seen it done. Close friends of mine ran a moderately successful hedge fund for a few years, throwing off 60-70% returns, before they got caught in the wrong positions at the wrong time and lost 75% of their capital. They were using highly leveraged positions and got caught with their hand in the proverbial cookie jar. It went downhill from there...

My 12-15% (real economic rate of return, NOT average rate of return) may not be 30+%, but I'm not taking considerable risk to get it. I do have my "play" fund, which is less than 10% of my overall portfolio, that I focus on individual investments (I rode Google most of the way up, but got off the train recently). Lately I've been playing some option strategies, and have been pretty successful with them.

That is great and if you are succesful and satisfied with your strategy then that is perfect.

That's why I say it is up to the individual investor and how success is defined.

What happened to your friends, well it does happen to some hedge funds. Other avoid that. It depends on the strategy which is implied.

Many hedge-funds use leverage without the proper safeguards. Leverage is a great tool if you know how to use it (as with any tool available).

If any fund manager looses 75% then the safeguards were not in place. Some hedge funds will blow up all-together. It is up to the management team to avoid those scenarios.

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It is not smart to play it safe but it is safe to play it smart.

Sure, I have no problem with alternative investment strategies.

As long as there is an accurate assessment of all risks involved.

All too often people jump on an investment bandwagon because they are "sold" on the idea of high reward, low risk, only to find out something entirely different. This includes investment schemes, computer-generated transaction schemes, newsletter schemes, penny-stock schemes, etc.

Also, I suggest people look at REAL rate of return, not average rate of return. Include annual tax bills (which have to be paid somewhere), fees, transaction costs, etc. in your analysis.

And with that hedge fund, they did have safeguards in place. But they were making such huge returns and pulling in money so quickly that the safeguards were long forgotten. Just as any investor can fall victim to, greed overwhelmed rationale and logic. When emotions choose your investment decisions, you always lose.

You are absolutely right. When emotions take over the investment decissions failure is the likely outcome.

The same holds true for greed.

Unfortunately many fall victim to the scams that you have mentioned. I think newsletter (although not all are bad but I guess over 90% are scam) and penny stock schemes are among the most common 'ideas-sold'.

Too many jump on those bandwagons due to lack of experience/knowledge. They are tricked by high returns, low fees etc. and the majoriyt of time will suffer significant losses.

The industry is so big and when it comes to money there will always be enough attraction for scam artists to fool the very greedy and un-informed.

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It is not smart to play it safe but it is safe to play it smart.