talk-show host I watch advocate going that route.

A: The principle arguments that

stock-picking advocates make for going that route are:

—You will make more money.

—Most mutual funds fail to beat the broad market averages, so why settle for mediocrity?

—You can control tax-related issues such as when you buy and sell securities and recognize taxable gains or losses.

Let's go through each of these.

Stock pickers love to point out examples of stocks that had you only bought them many years ago, would have made you a gazillionaire. Who among us wouldn't have loved to have bought stock in companies such as Amgen, Best Buy, Microsoft and Wal-Mart, which increased in value 30-fold or much more in the years and decades since they went public?

Imagine if you had invested $10,000 in each of these stocks in the first month they issued stock. Your total of $40,000 invested in each of these stocks would have grown to more than $20 million! The only problem here is that this is investing with a rearview mirror — 20/20 hindsight! Plenty of companies that issue stock see their stock prices actually go down, in some cases to nothing, if the firm goes bankrupt. And among the stocks that do rise, most price increases are far, far less spectacular than those shown in the table.

Through the years, I have never met an individual investor who picked stocks on his or her own and could tell me his or her portfolio's return for each of the past five years! If the motivation to pick your own stocks is that you think you can earn higher returns than a money manager running a mutual fund, you should calculate what your actual returns, net of all trading fees and after-taxes, have been each year during the past five years. Once you've done that, compare your returns with those of the relevant market averages and those earned by comparable mutual funds. If you can consistently beat the averages and the pros, you're in the wrong profession — become a professional money manager!

Now, it is true that most mutual funds fail to beat the relevant market index. There is a simple reason for this — the expenses, which on plenty of funds is more than 1 percent — place a drag on returns. Most of the studies I have reviewed on this topic typically show that about seven out of 10 funds underperform the relevant market average. However, that's not an argument for picking your own stocks! While I've never seen a legitimate, unbiased study on the topic of how individual investors do picking their own stocks, my interactions with many investors through the years suggest that at least nine out of 10 underperform. Also, there's a simple and powerful way to increase your mutual fund returns — shun costly funds.

As for control, it's true that you can exercise control over when you decide to buy and sell individual stocks and other securities. This requires a lot of ongoing vigilance, analysis and tax expertise, which few people have and is costly. This is an issue for nonretirement account investing, and there are good solutions with funds which can be chosen with tax considerations in mind (there are tax-friendly funds).

Investing in individual stocks requires extensive research and time, if you want to do it well. When taken to an extreme, the time and energy some folks expend watching their investments can negatively impact their emotional and mental well-being, their personal relationships, and, in the cruelest twist of all, the performance of that portfolio they're lavishing so much attention on.

If you're going to buy some individual stocks, be clear as to why you're doing so. Invest no more than, say, 20 percent of your stock holdings in total in individual stocks. You should be stock picking more so for the educational value than because you expect to earn market-beating returns. Be mindful of the common mistake individual-stock-picking investors make with being overly optimistic about company's future earnings, which is the single most important stock price determinant in the long term. When investors fall in love with a company and its stock, they tend to lose sight of the harsh realities of competition and economic downturns.