This article is from the How to Start an Investment Program tutorial, author unknown.
In the previous chapters on Index Funds and Mutual Funds, you were presented with two simple approaches to begin your investment portfolio. With an Index Fund, you could match the overall stock market return without doing any research on your part-- kind of like accepting an automatic "B" on an important exam. For those of you who wanted to try for an "A" on the exam, with full knowledge that you might wind up with a "C" or worse, selecting the proper mutual fund was your challenge. Now, I will introduce to you a method of selecting a portfolio of individual stocks that you may want to consider. Like selecting a mutual fund, it comes with no guarantee of matching the S&P average, but historically, it has done even better.