For years investors have been taught to look\rinto the composition of a mutual funds. In other\rwords the "experts" want you to take the time to\ranalyze the stocks within the mutual fund\rportfolio, categorize them by industry group and\rtry to understand the objective of the fund\rmanager. This is nonsense.

When I go the track I look to see what the horse\rhas been doing for the last several races. I\rdon't give a hoot what he had for breakfast. All\rI want to know is has he been fast? Is there a\rgood chance he will finish in the money in the\rnext race? I only want to know how he has been\rperforming.

Most mutual fund managers, except those who\rfollow index funds, are always trading. You have\rno idea that what is in the portfolio today was\rthere yesterday or will be tomorrow. Some fund\rmanagers trade more than others, but you can\rprove this to yourself by looking at the fund\rprospectus at the beginning of the year and one\rof the updates that funds publish quarterly.\rMany of the stocks will still be there, however,\ryou don't know if the percentage holdings are\rthe same.

By the way, don't bother reading a mutual fund\rprospectus. They are worthless when it comes to\rmaking money. Consider that most of the\rinformation in it is about a year old by the\rtime you read it. Think about this seriously for\ra minute. Is there anything you can find out in\rthe document that will show up in your bottom\rline? I'll wait while you think. OK? There\rreally wasn't anything was there? All\rprospectuses are basically worthless.

But you say the SEC (Securities and Exchange\rCommission) in Washington approved this. No,\rthey did NOT. They don't approve of anything;\rthey just read it to be sure it meets the\rregulatory requirements for disclosure. There is\ralmost no difference between the prospectus for\rthe worst mutual fund and the best mutual fund\rand both of them may have been read by the same\rDilbert in his cubicle at the SEC.

There is one excellent way to find out which\rfund to buy. It is based on performance. How\rmuch has the fund increased in price during the\rpast 12 months? Just 12 months. Many financial\ranalysts want you to look at 3-year, 5-year and\r10-year performance. Remember that horse? I\rdon't care how many races he won 3 or 5 years\rago. Can he run NOW? There are many publications\rand web sites that tell you the best performers.\rInvestor's Business Daily prints a list of best\rperforming funds each day. You might have to see\rthe paper every day as they sometimes just tell\rabout the long-term performance. You want the\rlast 12 months and the last 3 months.

Three years ago you could have bought the best\rperforming fund on the street and today have a\rdog. I call a dog any mutual fund that is not\routperforming the S&P500 index.

If you were a jockey you would want to ride the\rfastest horses because in many races you get a\rpercentage of the purse. The same applies to\rmutual funds. You must own only the best\rperforming funds at all times. Like the jockey\ryou must pick the fastest horse if you want to\rbe a winner.

You should review your fund holdings monthly to\rsee that you are only in the best funds. It\rmight take you an hour, but you will find that\ryou will double the current return on your\rmutual fund investments. Do it!

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" \rhas helped thousands of people make money\rand keep their profits with his simple 2-step method. \rRead the first chapter at http://www.mutualfundmagic.com \rand discover why he's the man that Wall Street does\rnot want you to know.