I have recently been contacted by a gentleman who has a large financial Internet web site devoted to mutual funds and he has asked me to act as an editor. He sent me a list of mutual funds and asked me to list them into 53 categories.

"Gee, Ken, thanks for asking, but I only have two categories." He was baffled. "What about Large Cap, Mid Cap, Small Cap, Sector, Index, Emerging Market, Value, Undervalued, Balanced, Closed End, etc. etc. funds? What about all those Wall Street "professionals" who say we should analyze our portfolios and put money into different funds?"

The answer is very simple. Don't listen to those "experts". The only expert is the bottom line.

My two categories are those that PERFORM and those that are NONPERFORMERS. How do I differentiate them? Again, a very simple test. The performers are beating the S&P500 Index and the nonperformers are not.

When you purchase a mutual fund what are you getting for your money? You are hiring a mutual fund manager who is supposed to be able to pick individual stocks for the fund that will increase in value to make your 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 you hire for any job cannot do an average job would you continue to employ him? Not really. Yet in 1998 only 319 of 8,520 mutual funds had managers that were able to beat the S&P500 index. Pretty pathetic.

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

Whatever funds you now own should be reviewed monthly and compared to the performance of the S&P for the last 12 months. Only12 months. Not 36 months. Not five years. Remember the admonition, "What have you done for me lately?" Fund managers run hot and cold and you don't want to stay with him when he has a cold streak.

When you 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 I guarantee your broker will not and you will be left with a small sum in your bag instead of the riches you deserve.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.