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Advantages Of Stock Over Mutual Funds?

The opposite of the diversification issue: If you own just one stock and it doubles, you are
up 100%. If a mutual fund owns 50 stocks and one doubl., it is up 2%. On the other hand,
if you own just onc stock and it drops in half, you are down 50% but die mutual fund is
down 1%. Cuts both ways.
If you hold your stocks several years, you aren't nicked a 1% or so management fee every
year (although some brokerage firms charge if there aren't enough trades).
You can take your profits when you want to and won't inadvertently by a tax liability.
(This refers to the common practice among funds a distributing capital gains around
November or December of each year. See the article elsewhere in this FAQ for more
(etails.)
You can do a covered write option strategy. (See the article on options on stocks for more
details.)
You can structure your portfolio differently from any existing mutual fund portfolio.
(Although with the current universe of funds I'm not cenain what could possibly be missing
out there!)
You can buy smaller cap stocks which aren't suitable for mutual funds to invest in.
You have a potential profit opportunity by shorting stocks. (You cannot, in general, short
mutual funds.)
The argument is offered that the funds have a There mentality and they all end up owning
the same stocks. You may be able to pick stocks better.