The "experts" tell us there are all kinds of mutual funds.

They put them into various classes such as Large Cap, Mid Cap, Small Cap, Sector, Index, Emerging Market, Value, Undervalued, Balanced, Closed End, etc. etc. Very confusing.

The answer is really simple. Don't listen to those "experts". The only expert is the bottom line and that devides funds into two categories.

There are two categories. Those that PERFORM and those that are NONPERFORMERS. How are they differentiated? Again, a very simple test. The performers are beating the S&P500 Index and the nonperformers are not.

When an investor purchases a mutual fund what is he getting for his money? He is hiring a mutual fund manager who is supposed to be able to choose individual stocks for the fund that will increase in value to make his investment go up. Not down. Not sideways. If the fund manager cannot do that he should be fired.

The S&P500 is merely a market average and an average job by a fund manager is staying even with it. If anyone is hired for any job and cannot do an average job would the employer continue to employ him? Not really.

So what do all the categories mean? Basically, nothing. This is more Wall Street smoke and mirrors trying to confuse investors to look at what the magician wants them to see while he is fooling the investor with his act. Investors watch his right hand while his left hand is dipping into their wallet. Wall Street hates the truth. They want to work their magic on investors with their convoluted ways. Simplicity is very difficult for twisted minds.

Whatever funds investors now own should be reviewed weekly and compared to the performance of the S&P. Fund managers run hot and cold. Don't want to stay with one when he has a cold streak.

When investors have your account with a discount broker most have funds that have no transaction fees or the fee is very small to switch to a better fund. If you don't watch out for your money your broker will not. You will be left with a small sum in your bag instead of the riches you deserve.

That is time to switch from the nonperformer to a performer. If a good performing no-load fund cannot be found then cash is the safest investment.

Al Thomas' new book, "If It Doesn't Go Up, Don't Buy It!", 3rd edition, has

helped thousands of people make money and keep their profits with his

simple 2-step method. The method made 10% during 2008. Read the first

chapter at and discover why he's the

man that Wall Street does not want you to know.

2011 Williamsburg Investment Co. All rights reserved.