mutual fund will likely tumble with it. If your professional money manager makes a series of bad investment decisions, they will be reflected in the performance of the fund, no doubt about it.
"And always bear this in mind: If you buy a common-stock fund at the height of the market, you're asking for trouble. 'Buy low, sell high' has long been a cliche of the investment business, but truer words have never been spoken. If you rush in and buy a fund, or for that matter any investment, because your neighbor's has tripled in the last five years, you're probably making a mistake. It's when your neighbor's investment has gone down thirty percent over the last two years that you're probably looking at a good time to buy.
"In addition to the fact that it's hard to time your pur-chase, and that mutual funds are subject to market fluc-tuations, there are a couple of other drawbacks.
"Mutual funds are very long-term investments. Precisely because they are hard to time and they do fluctuate, an investor has to be thinking long-term. Over a period of, say, seven to ten years, the economy, and therefore the market, will most likely continue to spiral upward. If you're willing to hold your fund for that length of time, you'll have little to worry about. But if you're buying a fund for a two- or three-year period, you'd better be a lot smarter than me! I'm confident that the market will perform well over the long run. It always has. But I'm not sure where it's going over the next couple of years. As I've gotten older, I've realized no one else is either. No one. As for consistently accurate short-term forecasters, there is no such animal.
"One final problem with mutual funds: They're boring. Nobody goes to a party and talks about how their mutual