Confidence Will Help Turn Mutual Funds Around

Washington, DCA few years ago former CBS News anchor Dan Rather ended his final newscast with a thought that centered on the word 'courage.' We certainly need that today, with mutual fund losses stacking into the billions. Americans are justifiably concerned over the status of their mutual funds as it relates to their retirement, and the potential for mutual fund ERISA mismanagement have many investors running to their lawyers.

But if Dan Rather were ending his final CBS News report today, another word he might consider using could be 'confidence.' It would be a toss-up, because both words could qualify for word-of-the-year status. We need both courage and confidence, that we will weather these stormy seas and make landfall in one piece. As a team, courage and confidence is a good pairing.

But on their own, only one word will win the day. And that's confidence. The latter is the watchword for global markets that are so interconnected; when one side of the world sneezes the other side reaches for its Kleenex. While courage will ensure we remain brave, and we do the work that needs to be done without crying in our oatmeal, confidence is what will restore the markets, bring mutual funds back, and help to erase mutual fund losses.

The nation's 44th President knows this well. Unlike his predecessor, who went on an extended vacation after winning office in 2000 and left much of the decision-making to his second-in-command, Barack Obama is moving like a man who has his act together. Most believe that he actually does—but even if he didn't, it's important for him to appear like he does for the confidence markers it will earn the country.

He knows that much of the building blocks of America's status as a super-power originate from economic clout. And it's the confidence that other countries and global investors have in the great United States of America, which drives the investment engine our way. It's America that has its hand on the tiller that drives the rest of the investment world. Steady as she goes, Cap'n. As long as it's you in the wheelhouse, we'll get through.

Where would the good ship U.S.S. Enterprise have been, without Captain James T. Kirk? Spock was the brains, but Kirk was the soul of the fictional series that became real for billions of people around the world. Even in the face of ever-present danger, all would be well if Kirk was on the bridge.

In similar fashion, Americans are looking to President-elect Obama to steer them through the storm. In fact, the entire world is counting on him to restore America's economy; put it on a more firm foundation, and inject renewed confidence into the remainder of the global economy. The implosion originated here, and so too must the healing. The balm applied to America's economic engine will radiate out to the remainder of the world markets, soothing them.

Confidence.

It's a word that applies to the everyday investor too, and to holders of mutual funds. Not only will investors need to regain their confidence in the market, and the gains a confident market can make for them—they also have to have confidence in the individuals managing their money.

Like many, you are worried. Your mutual fund losses are nothing like you have ever seen before. And like an increasing number of Americans, your retirement is tied to those funds. They're your nest egg. There have been many reports of Americans having to delay their retirement plans, or even come out of retirement completely and go back to work as the result of mutual fund losses in the stock market. Thankfully, the current generation of baby boomers is a healthier lot than their parents. You've been looking after yourself, going to the gym, leading an active lifestyle. Provided you can find the work, you're healthy enough to slug it out for a bit longer if you have to.

And as you look to President-elect Obama to steer us out of this mess, you can also have the confidence in mutual funds as an industry, and the protections it carries. Unlike hedge funds, which are largely un-regulated, there are various transparencies inherent with mutual funds that provide protection to the investor should things go wrong. In other words, should your mutual fund manager invest your money in products, or in such a way that was not in your best interests, you might have an actionable claim under mutual fund ERISA guidelines.

In this market, pretty much the only people who haven't experienced losses are those who may have cashed out before the dung hit the fan and stuffed their mattress with cash. It's been tough on everybody, and will be until the 44th President leads the country back into prosperity via hard work, vision and determination. Confidence, my boy.

In the interim, you need to push away the bowl of oatmeal you've been crying in and take a good, hard look at your mutual funds and how they were managed. Were your instructions followed? Were your investments handled according to your stated risk tolerance? Were investments made on your behalf, made with your best interests at heart according to ERISA guidelines?

If not, you may have a claim. And here is where courage, and confidence team well to win the day. The courage to undertake that mutual funds ERISA claim, in order to recover some of your losses. And—with the help of a mutual fund ERISA lawyer, the confidence that you will succeed.