The year 2000 was a textbook case of investor lessons that have been learned before and which had to be learned again.

Fundamentals matter, a great deal, suddenly to money managers not old enough to remember 1991, 1987, and to folks who placed their hard-earned money with them.

It is almost a mantra these days, investment professionals spouting effusively about the health sector, the financial sector, the defensive sector, when last year everyone chased paper riches in the technology area only.

If you want to start back into the market, think about the two things; one, exactly what can you really tolerate in investment risk (most of you know for sure after last year), and two, the power and diversification of mutual funds.

Yes, you will pay a front-end or a back end load, but you have to weigh the whole picture.

The whole can be greater than the sum of its parts.

Mutual funds are groups of stocks of various companies, generically speaking.

They can be selected from any number of different industries, geographic areas, volume of business and so on.

Last year the average diversified stock fund lost an average of a little over one percent (1.67 percent). That means that close to 50 percent had a positive return, no loss of principal with health care MFs gaining 53 percent; natural resources rose 30 percent; financial services stock funds rose 27 percent.

Compare those returns above to a mutual fund loaded with tech stocks, and the losses were bad, bad, on average down in the cellar more than (35 percent).

Gun shy investors continued to pull money out of mutual funds right up through the end of the year.

Owning a group spread out the risk of failure of the companies themselves.

Your $10,000 in a mutual fund might own a fraction of anywhere from 30-300 companies.

Your $10,000 placed in one stock is a nail-biting event.

In order for you to even begin to have a fairly diversified portfolio of single stocks, you need at least 20, and even that is hotly debated among professionals.

Personally, I feel that 20 is too low, managed professionally a different story, but we are not talking about a managed personal portfolio here.

Minimum order placement for a stock purchase is $2000; firms in Bermuda charge on average anywhere from $60-$100 for an order placed with a broker (not direct or on-line).

So simple math 20 times $60 $1200. Total spent $41,200.

Now you must watch these stocks, buy and sell when appropriate, which adds to the cost of running your own portfolio.

Even if you opt to trade on-line, the average online trader making 20 trades a month at an average of $15 $300, the cost adds up quickly.

Purchasing a deferred charge mutual fund (one-half to one percent of the four percent commission is deducted from your fund over four to six years ($1600) means that the entire $40,000 placed into say five diversified mutual funds goes immediately to work.

You may actually own fractionally shares in as many as 1,500 different companies.

But do you? This is where you have to do your homework.

Readers, I cannot emphasise this enough.

Last week, I saw investment information given to a 75-year-old individual by a local financial firm and their customer service representative.

The recommendations were totally inappropriate for his/her age, financial profile and understanding of investment markets.

If you do not understand, please ask, lots of questions about the products and the advisor.

One question of great importance is: "What is your experience and qualifications as a financial advisor?'' Listen carefully to the answer, you need to feel real comfortable with an advisor's level of experience.

The Bermuda Stock Exchange supports a programme whereby individuals employed in the investment field selling investment products and advising clients, have the opportunity to take the self-study investment course, then sit for the United States National Association of Securities Dealers Series-Seven exam.

This BSX initiative is setting the standard for financial advisors in Bermuda and elevates the professionalism of all investment personnel.

Everyone who passes this course (or has gained equivalent experience over the years) deserves a congratulation.

Next week, we discuss what the components of a well-rounded mutual fund portfolio are, for your ages and risk-tolerances.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments.

Readers needing specific assistance should seek professional advice from their financial advisor.

Martha Harris Myron CPA is a Bermudian, a Comprehensive Financial Planner, holds NASD Series Seven license and is a US tax practitioner. She is Programming Chair for the Financial Planning Association of Bermuda. Questions regarding this article may be sent to marthamyron ynorthrock.bm The Financial Planning Association of Bermuda has it regular lunch meeting this Thursday at the Royal Bermuda Yacht Club at 12:30 p.m.

The cost is $30 for members and $40 for non-members. Checks or exact change at the door please.

This week's topic will be Health and Biotechnology Stocks and the future for this significant industry in the age of "almost'' perpetual life, as today, we are living longer than ever before.

The speaker will be Tim Beplar who is the manager of the Orbitex Health and Biotechnology Mutual Fund.

Please confirm by no later than Wednesday noon at jbarnett y las.bm A wild one: Traders signal and record their trades in the Nasdaq 100 Futures Pit of the Chicago Mercantile Exchange. Last year was a wild year for investors with many being forced to relearn basic investing principles after suffering losses.