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Instilling Nerves of Steel

If you can't say anything nice about someone, don't say anything at all.

When it comes to mutual funds' communications with investors about today's economic realities, the industry puts a positive spin on the market.

In "Stock Market: Exit at Your Own Risk," Fidelity Investments warns investors against trying to time the market, showing how missing out on just the five best days in the past quarter century can seriously undermine a portfolio (see illustration).

Janus also makes a compelling long-term case by juxtaposing a chart of the Dow Jones Industrial Average's monthly closing prices between 1977 and 2006-an impressive upward trend-against a depressing sound byte of that story, the DJIA's daily closing prices between March and November of 2001.

"Today's markets offer opportunities that are high up in the capital structure," writes Mohamed El-Erian, PIMCO co-CEO and co-CIO, "and that, in a few years, will be looked at as incredible bargains."

Putnam Investments Managing Director Jeffrey L. Knight compares equity prices of today to those of 10 years ago, telling investors: "Equity prices have stagnated over the past decade, even as companies earned record profits, [making] stocks unambiguously a better value today than in 1998. Long-term investors should stay alert to the prospect of very attractive valuations building in equities."

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