Disgusted With Hedge Funds? Fight Back

Pick some good hedge funds whose portfolios we track on Stockpickr. Pick two or three positions from each until you have somewhere between 20 and 30 positions. Try to be diversified.

For instance, go to Warren Buffett's portfolio and maybe pick out Burlington Northern(BNI) and Johnson & Johnson(JNJ).

Go to T. Boone Pickens and perhaps choose GlobalSantaFe(GSF) and Transocean(RIG).

Check out Eddie Lampert's holdings, from which you could choose Sears(SHLD) and Citigroup(C).

From Carl Icahn's portfolio, you could glean Blockbuster(BBI) and Motorola(MOT).

You could check out Atticus Capital for TD Ameritrade(AMTD) and Eagle Materials(EXP).

If you want some Internet exposure, go to the Jacob Internet Fund for ideas such as Google(GOOG) and Sohu.com(SOHU).

When you've got your basket of great positions, keep these things in mind:

• You're not paying the enormous 2-and-20 fees -- 2% of your principal each year plus 20% of any profit -- that most hedge funds charge.
• The smartest minds in the business have done all of the legwork and research for you.
• In the situations where they are activist -- for instance, Carl Icahn on Motorola -- they foot all the costs for lawyers and proxy fights. Your investment is not being drained by that.
• You're diversified.
• You can get the heck out whenever you like. Want to send your kid to college? No problem. Sell some J&J and pay for it. You aren't gated every which way from Sunday by the charming salespeople who promised you enormous returns.
• And with the market in general moving up 9% a year and with these stocks representing the best positions of the top professionals in the business, you have a decent chance of making some money.

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