What did the mutual fund companies have that spoke to the Boomer?
The mutual funds have historically offered safety and diversification. And they spare you the responsibility of picking individual stocks. Now it’s interesting. In the 1920s, mutual funds were introduced under the name of “investment trusts”. And there were two qualities about the mutual funds of the 1920s that made them extremely speculative. One was that they were heavily leveraged, that is, they made a lot of investment with borrowed money. Two, mutual funds were allowed to invest in other mutual funds. And the guaranteed that in a market downturn they would all drag each other thunderingly down together, which is exactly what happened in 1929. Now although the brokerage industry fought a lot of the securities reforms of the 1930s, the one aspect of the financial services industry, the one part that was very, very receptive to having strong regulation, was the mutual fund industry, because they realized that if they had very strong regulation to protect investors, it would actually
