The purpose of this book is to guide investors in developing and implementing an intelligent investment program through mutual funds. It does not attempt to tell you how to attain wealth without risk, nor does it attempt to tell you how to select the next “number one” equity fund. Both of these tasks are, in a word, impossible, and I fear this book would lack all credibility if I did not acknowledge that fact at the outset.

Rather, what I hope to provide is a sensible framework for establishing a long-term investment program that will meet your financial needs. Such a program must take into account: (1) your investment attitudes, whether conservative or venturesome; (2) your position in the life cycle of investing, as you move from the accumulation of assets during your earning years to the enjoyment of income during your retirement years; and (3) the behavior of the securities markets over the long run, from which much (but not too much) should be learned.

This book deals solely with mutual funds. It does not deal with the analysis and evaluation of individual stocks and bonds. In my view, attempting to build a lifetime investment program around the selection of a handful of individual securities is, for all but the most exceptional investors, a fool's errand. To be sure, by owning individual equities, some active investors will inevitably enjoy spectacular results. But others perforce will lose much of their capital. Earning extraordinary returns from the ownership ...

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