Why are my mutual funds so volatile? Help

[Mikey1946]

Please help

I recently retired and rolled over my 401K into a self directed IRA. I invested all of the moneys into class A American Funds mutual funds, spreading it across (6) funds across the globe.

I thought I was reducing my risk and avoiding volatility. Much to my disappointment I took a 36-40% loss when the economy tanked in late 2008.

I gradually crept back into the market via the same or similar mutual funds in 2009 and was feeling OK January this year. Nevertheless, when the DJIA pulled back 500 points (about a 5% retreat) this February I checked my so-called class A funds and found that they had retreated an average of 8%.

My question to my financial advisor was why did my hand picked funds, specifically the foreign funds that were 100% invested OUS, responded so negatively to a fluctuation to a US index (DJIA)? His glib response was that he had never seen a mutual fund buck a trend.

My question to you is why do my foreign-invested mutual funds track the DJIA so precisely with very little lag time? Do the global markets lead the DOW or does the DOW lead the way?

How do I isolate myself from the extremely volatile US markets when investing in foreign-based mutual funds doesn’t work?

My careful analysis seems to be a waste of time and futile until I gain a fundamental understanding of who’s running the show.

Thanks

[nodoodahs]

You might find this interesting.
http://www.cxoadvisory.com/blog/external/blog3-08-10/
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