Lou Samuels was really excited. After watching a commercial about the New Century Fund on NBC and talking to a representative of the mutual fund at an 800 number, he was ready to commit. And why not? The fund had an annualized compound rate of return of 16.6 percent over the last 10 years. Furthermore, he was impressed with the fact that it was a low-load fund with an initial commission of 3 percent and an exit (sales) commission of 0.75 percent. The mutual fund shares for this aggressive growth fund were currently selling at $36. He planned to make the purchase the next morning. Although the fund kept its phone lines open during the evening, he had previously scheduled a tennis match with his investment advisor, Tony Roseman, and decided to tell him about the proposed investment first. As they were warming up for the match, Lou told Tony about the exciting mutual fund he was about to invest in. Tony, a CFP, had been in the investment business long enough to know that investors are sometimes swept away by their enthusiasm and make hasty, not well-thought-out decisions. How might Tony Roseman advise Lou to approach his decision regarding the New Century Fund? In what ways might investors make hasty decisions when it comes to investments, according to Tony's experience in the investment business?
Lou Samuels was really excited. After watching a commercial about the New Century Fund on NBC and talking to a representative of the mutual fund at an 800 number, he was ready to commit. And why not? The fund had an annualized compound
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