I am fascinated by the way most people invest, because it is demonstrably wrong. Here's how you probably pick your mutual funds.

Your broker calls and tells you about a mutual fund he believes is right for your portfolio. The pitch usually involves a discussion of the stellar past performance...

The financial media was all atwitter when Standard and Poor's downgraded the credit rating of nine European countries on Jan. 13, 2012. France and Austria lost their triple-A rating. CNBC's reaction was typical. It described this event as "a Black Friday 13th for the troubled single currency area."

Brokers and advisors like to describe their activities in terms indicating the benefits they bestow upon their clients. "Wealth manager" is one of my favorites, because it conveys the impression that using them is likely to increase your wealth. Using the wrong adviser can have the opposite effect. They can...

The views of the Republicans running for office are getting a lot of air time. Whatever the relative merits of these candidates, investors might be misled by some of the spirited dialogue.

Two issues stand out as having the potential to lead investors to the wrong conclusion: The accusation that...

Everyone wants to be a stock market winner. There were some big winners in 2011.

Investors in US TIPS did great. This index tracks U.S. Treasury inflation-protected securities that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding...

As legend has it, when Einstein died, he met two men and a woman outside the pearly gates. Always one to strike up a conversation, he asked them about their IQs.

The woman said her IQ was 190. Einstein was excited. He said: "We can discuss my theory of...

This is the time of year when the financial media goes into overdrive. You can expect no end of predictions for 2012. Some will be right. Others will be wrong. Those who are right will anoint themselves (or be anointed) as new "gurus" with magical predictive powers. Actually, they were...

Here is the harsh reality: 401(k) plans are a false crutch for employees. They simply don't work, if you define "work" as providing funds that will permit retirement with dignity -- if at all. According to Fidelity Investments, average balances in 401(k) plans as of March 31, 2011...

The economy is reeling. Everyone is hungry for business. American firms are locked in intense competition with global competitors. A recent experience I had illustrates how the difference in cultural approaches towards business places American firms at a distinct disadvantage.

I was asked as a favor if I would review...

A recent blog on CNBC almost made you feel sorry for active managers It referenced a study by Bank of America Merrill Lynch which found that active managers were having "a rough year." Only 23 percent of large-cap managers beat the S&P 500 index and only 27 percent...

What do these well known financial celebrities have in common: Jim Cramer, Larry Kudlow, Jeff Macke, Joe Kernan and Dylan Ratigan?

They are all extremely confident. There is little personal vulnerability in their presentations. They provide their views on the economy, attempt to pick stock "winners", engage in marking timing...

I recently reviewed the portfolio of a young man who had inherited almost $1 million. He had entrusted his funds to a large mutual fund company. He thought his portfolio was "well diversified" because almost all of it was invested in an S&P 500 Index Fund. Several issues were apparent,...

In my blog last week, I noted the lack of evidence of investment skill demonstrated by fund managers. This issue always elicits a passionate response, with readers providing their favorite examples of managers who outperformed the markets. These examples miss the point. I am not suggesting no one...

The sordid details concerning the demise of MF Global are well-known. MF Global is the holding company for a broker-dealer headed by former New Jersey governor and Goldman Sachs co-chairman Jon Corzine. According to published reports, MF Global filed for bankruptcy on October 31, 2011. Its broker dealer...

There are times when I have a very jaded view of the judicial system in this country. The O.J. Simpson and Casey Anthony verdicts showed that justice is not always done in criminal cases. Civil cases are much worse. The securities industry routinely victimizes its clients with impunity. A cozy...

The protests on Wall Street and elsewhere throughout the world are gaining strength. Clearly, many people are unhappy with the current system, which works well for the privileged few. Many remain confused about these protests. What are their goals?

It didn't take me long to find an example of...

I recently met with a wealthy client. We manage half his assets. The balance is handled by a broker who picks stocks. I asked him why he believes the broker can pick stocks that will outperform the market. He told me the broker spends all of his time studying the...

Troubled times bring out the worst in the financial media. It understands that creating fear and anxiety boosts readership and viewers. Brokers love to explain how it really is different this time, and why new strategies are required to cope with market volatility. This advice usually means an increase in...

Updated below.

Morningstar is supposed to know more about mutual funds than anyone else. All the more surprising that it would proudly publicize the criteria it used to select mutual funds in its own 401(k). A recent blog by Russel Kinnel, Morningstar's director of mutual fund research,

I don't mean to pick on Jeff Macke. His daily videos on Yahoo's Breakout are no worse than what passes for financial journalism in much of the media. Recently, I took Mr. Macke to task for advising investors to engage in the discredited notion of market timing. That...