For most of my
investing life I have been led to believe that the best way to invest is
through mutual funds. Those professional
managers have a better chance at picking winning strategies than the individual. A huge network of equity mutual funds had been
built up that are household names and that many individuals have entrusted with
their 401k’s and other investments. The
truth is that today the mutual fund strategy is outdated for even the most
semi-knowledgeable investor.
Particularly, with the benefit of hindsight mutual funds are not
particularly good vehicles in turbulent markets like we have today. In fact, investment in individual stocks
makes way more sense.
As recently as
twenty years ago it was very difficult for the average investor to gather enough
information on a particular company or stock.
There was no Internet. However,
today a wealth of information is available with the click of a mouse. Investments in individual stocks are more flexible.
And more rewarding. They are more liquid on a daily basis which has become very
important in this market environment. The
best way to play a market recovery is with some well bought stocks and not by
holding on to your mutual funds. Sell
them and use the proceeds to embark on a new investment strategy more in
keeping with the times.