Take for example, Enterprise Group of Funds. It shows an expense ratio of almost 2% plus a sales charge of 4.75% according to Morningstar. Tackon underlying expenses and you're paying out more than 3% a year in investment expenses.

If you're a new investor (with less than $10k), and have your account at a discount broker, you can add a minimum of 1% per year in fees just for privilege of having an account. That brings total up to 4% in annual expenses.

Talk about adding insult to injury.

FOFs are sometimes being touted as only fund you need no matter what investment climate. So, let's compare to see how Enterprise fund of funds performed during same period as mentioned above for Freedom funds:

Enterprise Group of Funds: -35%.

The bottom line is that no matter what type of mutual fund you choose, or what anybody claims it will do for you, you must be vigilant and see if it does what you were told it would.

In investing, there is simply no such thing as a sure thing. Sure you need to know how to recognize a good investment. But just as important-maybe even more important-you must know when to recognize that a good investment idea didn't work out, cut your loss, and sell.

To say it more bluntly: If you buy an investment and you don’t have a clear strategy for taking profits if it goes your way, or taking a small loss if it goes against you, you are not investing; you are merely gambling.

The last 2-1/2 years clearly illustrate that it is as important to be out of market during bad times, as it is to be in market during good times. Want proof?

According to InvesTech’s monthly newsletter it turns out that, measuring from 1928 to 2002, if you started with $10 and you followed famous buy-and-hold strategy, that $10 would become $10,957.

If you somehow missed best 30 months, your $10 would only be $154. However, if you managed to miss 30 worst months, your $10 would be $1,317,803! Thus, my point: Missing worst periods has profound impact on long-run compounding. There are times when you end up better off by being out of market.

Interestingly enough, if you missed 30 best months and 30 worst months, your $10 would still be worth $18,558, which is 80% higher than buy-and-hold strategy. This all comes about because stock prices generally go down faster than they go up.

Wall Street and most people tend to overlook value of minimizing loss, and that is exactly why bear demolished more than 50% of many peoples' portfolios while I and those who trusted my advice escaped worst of beast's rampage.