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Take Substance Over Bluster

The stock market, like the ocean, tends to punish those who think too big.

In The Lies About Money: Achieving Financial Security and True Wealth by Avoiding the Lies Others Tell Us -- and the Lies We Tell Ourselves (Free Press), financial planner Ric Edelman, a media creature in his own right though not on the order of Trump, thinks smaller.

He takes a look at the details of the mutual fund business, which are filled with little lies. This is a subject dear to my heart, as throughout my time on Wall Street I found the general public woefully misinformed on two subjects:

1) How off-kilter the business media's portrayal of finance can be and
2) What mutual funds are really all about.

Anyhow, read all about it here. In fact, this book is a must read for anyone with a mutual fund or who is even thinking about thinking about buying one. It obviously gets a Business Press Maven "Help" label.

Fast forward right to Chapter Four, where you can read about everything from costs to stale pricing managers who jump jobs and moonlight for hedge funds when they are not window dressing their funds with hot stocks at the end of the quarter. There is also a timeline of scandal in the chapter, which stretches nearly to the end of time, but scandal is everywhere. The 25 criticisms are more essential to be aware of.

The problem is, much of the public is not equipped to pick their own individual stocks, and Edelman makes that point appropriately clear. So read on for his recommendations, which float from institutional mutual funds to exchange-traded funds to, in some circumstances, variable annuities. (Ugh. But I digress and, again, in fairness to Edelman, he brings up negatives.)

Flip through the suggestions to see what might make sense to you. There is a lot out there. While you are at it, ignore certain aspects of the book outright, like Edleman's reminder not to let a book substitute for a real live financial advice firm like his (probably true, but shameless). Also ignore some historically suspect claims, like ones about how only 20 years ago college savings was a "revolutionary idea" and few had heard of mutual funds and financial planning.

That sounds like it comes right out of a mutual fund sales pitch, which is something Edelman does know a lot about. Mutual fund owners, this book's Chapter Four is as important to understand as anything you will read. And that's no lie.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback; click here to send him an email.

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