Clearly there is a disconnect here because strong market activity typically isn't met with widespread pessimism.

'The market's move is dollar-weighted, it's being fueled by the big institutions but retail investors have, for the most part, not participated,' says Jack Ablin, chief investment officer for Harris Private Bank in Chicago. 'Fewer and fewer people are participating in the market's prosperity.'

Some of that situation is hangover from the last bear market. Investors who became euphoric in the late 1990s got hammered when the market turned in 2000 and they're not anxious to repeat the experience. They discount the market's performance because of all the negative factors they see out there and don't want to get caught up in any euphoria because that was a big reason they got tripped up the last time.

Another issue is inflation, particularly as it impacts regular costs and savings. This is where, for many people, rising gas prices figure in.

A recent study conducted for the Civil Society Institute's 40MPG.org project showed that about half of all households, regardless of income level, will "definitely or probably" have to cut back on personal spending if gasoline hits $3.50 per gallon."

Zurich Capital Markets, a U.S. subsidiary, helped four hedge funds disguise their identities to avoid detection when making frequent trades in mutual-fund shares, a practice called market timing, the SEC said in statement today.

By knowingly financing their hedge funds clients' deceptive market timing, ZCM reaped substantial fees at the expense of long-term mutual-fund shareholders,' Mark Schonfeld, director of the SEC's regional office in New York, said in the statement."

The settlement includes a $4 million fine and forfeiture of $12.8 million in profits. The money will be distributed to mutual-fund investors harmed by the trading, the SEC said."

The 12(b)1 mutual-fund fee should be eliminated, just like fixed brokerage commissions were more than three decades ago.

As additional charges levied on mutual-fund shareholders, 12(b)1 fees were introduced in 1980 to help companies pay for marketing and distribution expenses. Yet over time, this revenue, which diminishes your total return, has been directed to brokers and other marketers.

'Does the fee do anything to help the consumer? Absolutely not,' says Jeff Seymour, managing director of Triangle Wealth Management LLC in Cary, North Carolina. 'Most of the time it's a 0.25 percent annuity for doing nothing.'

'What's worse is that sometimes 12(b)1 fees are a full 1 percent annually,' Seymour says. 'The broker-salesperson has no obligation to do any work for that revenue stream. This income is on top of any commission or asset-management fee.'

Unless lobbying by the industry manages to save it, the fee may be cut by the U.S. Securities and Exchange Commission, which is reviewing it.

'The transformation of the 12(b)1 fee from a distribution subsidy to a sales load in drag is now so nearly complete that the primary purpose to which the $11 billion in 12(b)1 fees last year were put was to compensate brokers,' Christopher Cox, chairman of the SEC, said on April 13 at the Mutual Fund Directors Forum in Washington."

The reason that so few mutual funds beat the market over the long term is that investors shift too much money into the successful ones, or so the theory goes. As a result, these funds’ managers quickly become swamped with more money than they can invest profitably, causing performance to suffer.

A helpful analogy, Professor Berk said in an interview, is to the so-called Peter Principle, which predicts that employees will be promoted until they reach their level of incompetence. Similarly, a mutual fund manager who beats the market will continue to attract more assets until he can no longer beat the market."

This theory has been less successful, however, when applied to the worst-performing mutual funds. Less-able managers should become competitive once their portfolios become small enough, because, according to Professor Berk, it is easier to beat the market with a smaller portfolio than with a larger one. So, as investors shift money out of a lagging fund, its size should stabilize at whatever lower level is necessary to give its manager a fighting chance of beating the market.

If this part of the theory were right, the worst performers would be no more likely to stay bottom-ranked than top performers to remain top-ranked. But that is not the case, according to the professors. A low-ranking performer, in fact, has a significantly greater chance of continuing to be a low-ranking performer than a top-ranking performer does of staying at the top."

• Handheld "slide-rule calculators." I love old-fashioned, cardboard hand-held gadgets that let you slide your way through inputs and outcomes. You practically can't stop playing with them, learning something with each move. They're simplistic, but still a good jumping-off point.
• AllianceBernstein's "College Debt Crunch." This calculator is one of the most interesting I have seen in a long time because it is designed to show the long-term impact of education debt on college graduates. A few minutes playing around -- or letting your kids use it if they are responsible for tuition -- and you're likely to increase your college set-asides immediately. You can get the calculator by calling AllianceBernstein at 800-227-4618. You also can order versions online or use an electronic version at www.collegedebtcrunch.com.
• College savings. Of course, it helps to know how much money you will need to save and the college savings slide-rule from American Century's Learning Quest program gives you a quick-and dirty estimate of how much you will need -- and how much to invest monthly based on your child's age -- in order to pay for a public or private education. You can get the calculator by calling 1-800-579-2203.
• Allocation models. The asset allocation calculator from Franklin Templeton Investments (1-800-342-5236) remains one of my all-time favorites, providing five sample allocations and allowing you to track how money invested that way would have performed over the five- to 20-year periods ending Dec. 31, 2006. This lets you measure your current strategy against others, letting you know if you want to stay the course or need to consider a change.
• Putnam Investments' "retirement calculator." This slide-rule -- available at 800-225-1581 -- is a two-sided, dual-purpose keeper. On one side, it allows you to determine the future value of systematic investments; it's a great way to show not only how $50 a month adds up over time, but how doubling that number -- or going even bigger -- will turn small monthly dollars into lifetime money. On the flip side, the calculator helps determine the future value of your current savings, which will help you see how much $10,000 will have grown to when you reach retirement, based on various rates of return and your current age.
• Organizers. T. Rowe Price recently created a new "family records organizer" that is a terrific tool for anyone trying to get a handle on their finances. The freebie in this case is actually a CD-ROM -- available by calling 1-800-538-2706 -- that does a great job of helping a family gather and manage its records in one single place. Having looked at fund freebies for years, this is one of the best I have ever seen.
• Mixing it up. As long as you are calling T. Rowe Price, ask for the company's "asset mix worksheet," as it could be a very good tool for deciding how to best position your money.

Of domestic stock funds, 47% in the cheapest quintile succeeded in beating the category average over a ten year period, 33% in the next quintile, 30% in the following quintile, 27% in the next and just 19% in the costliest quintile. Or in other words, you are over twice more likely to beat the category average if you are in a low cost fund than in an expensive fund. The success disparity was also similar for other fund categories. For foreign stocks the probability of category out-performance between the low cost funds versus high cost funds was 40% to 18%, for taxable bond funds this was 48% and 7%; 49% and 9% in municipal bonds."

A recent survey of wealthy American investors found that more than half believe U.S. markets are riskier than international markets. That's a reversal of traditional thinking and a sign that investors may be taking potential problems in overseas markets too lightly."

Along with specific countries, sector allocation is something investors may not be heeding closely enough in their international fund, said Jeffrey Kleintop, chief market strategist at LPL Financial Services. He said a fund that concentrates too heavily on the BRIC countries (Brazil, Russia, India, China) could be presenting a fairly sizeable risk for that investor, given the sectors involved.

'They've been an interesting area to invest in recently, but when you take a look at commodities exposure there, energy and materials make up 50% of the market cap of those countries. You're making a pretty big bet on the continuation of the bull market for commodities...that's a risk you may not be aware of.'

Conversely, some international funds may be lacking in exposure to certain sectors, Kleintop said. 'Most international markets are more value-oriented than those here in the U.S. For example, looking at the EAFE (Europe, Australasia, Far East) Index, that only has one-third the weighting of technology we have in the S&P 500, half the weighting we have in health care. We would consider those to be growth sectors from a style perspective."

Matt Hutcheson, an independent fiduciary consultant based in Tigard, Oregon, says workers are overcharged by as much as 3.5 percent annually. 'Just 1 percent in excess cost to participants represents a wealth transfer of $25 billion to others -- each and every year,' he said.

Some of the most egregious charges are often hidden in retirement-plan documents and involve revenue shared between fund managers and middlemen.

So-called pay-to-play fees also saddle workers with charges that are loaded into your fund expense ratios. For example, a fund company may pay for 'shelf space' or inclusion in a 401(k) plan, also called a platform, says Tim Wood of Deschutes Investment Advisors LLC in Portland, Oregon.

'The participant may be paying up to 0.90 percent annually for a fund,'' says Wood, 'but is not able to determine what fee may have been paid to the platform provider. It is possible that a better option could have been made available to the participant from the entire universe of funds rather than only those that will agree to revenue sharing with a platform provider."

Employers have a huge incentive to open up the black box of 401(k) expenses. At least 16 lawsuits are pending that allege employers and insurers that offered plans failed to disclose third-party fees.

The reason for enhanced disclosure and identifying who is running your plan is simple. The more you know about how much you are being overcharged, the more you can lobby for lower fees. It's called having consumer choice in the free market."