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title: Invest in the World's Great Companies via Mutual Funds description: [AFW S.2.7] Investment Principle #7 published: true date: 2026-06-30T08:08:20.006Z tags: editor: markdown dateCreated: 2021-04-27T18:45:46.579Z

Watch Why Mutual Funds? (2023-05) VIDEO


What Makes Money?

There are only two entities that make money, and only one is legal: Printing Presses and Companies.

“I see myself as buying stakes in companies - pieces of businesses. Rather than pieces of paper which can be easily traded in the market.” ―Michael Cohen

“We’re not even investing in “the stock market” as such. Rather, we are investors in companies.” ―Nick Murray

“Invest your money where the smartest people invest their time.” ―Sahil Lavingia

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  • The Federal Reserve was founded in 1913.

  • Since then the dollar's value has fallen by 96%.

  • The stock market has risen by 3,138,470%.

  • Invest your money in the world's great companies.


  • Publicly-traded companies are the best long-term investment.
  • Equity mutual funds are the best method of investing in publicly-traded companies.


What is a Mutual Fund?


The best vehicle for long-term investing

  1. The most powerful force on earth is human ingenuity.

  2. Equities (publicly-traded companies) are the only asset class that fully captures human ingenuity.

  3. The best method of investing in equities is a mutual fund, which can be defined as: a broadly diversified, professionally managed collection of the world's great publicly-traded, mainstream profit-seeking companies.


“There has never been, in the history of the world, been an asset class — or indeed any financial vehicle — which generates real wealth as reliably and as effortlessly as do mainstream American common stocks. Moreover, those equities are available in an almost infinite variety of packaged forms, at little or no direct cost, to even the smallest investor on essentially the same terms as those offered to people who’ve already generated huge fortunes.” -Nick Murray

“We want to own a basket of shares of the world's most substantial, soundly financed, profitable and innovative global businesses, many of whose products and services we purchase regularly, some as often as every day.” -Nick Murray

“We are long-term owners of well-diversified portfolios of superior companies that have consistently demonstrated their ability, in time, not merely to survive but to triumph over any and every earthly species of 'crisis.'” -Nick Murray

“A mutual fund is a lot like a pie — no matter how small (or big) a slice you take, you still get the same ingredients.”

A mutual fund is a professionally managed type of collective investment that pools money from many investors and invests it in stocks, bonds, short-term money market instruments. The mutual fund hires fund managers that choose exactly where to invest the pooled money.

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Read Nick's ATY 117 April 27 - Rationality of Capital PDF


Major Benefits of Mutual Funds

  • Consistent performance, relative to "picking stocks".
  • Two layers of the best human thinking. 1) The executives running the companies where investing into; and 2) the mutual fund managers who decide which companies to invest in.
  • Relatively low volatility compared to other investments.
  • Lower stress and maintenance for the client. Once they've invested in a mutual fund there is nothing more to do. All investment decisions are made by the fund managers.
  • Massive diversification across companies, industries and countries.
  • Professionals managing the money (not you!).
  • Money is accessible within five days.

Read Nick's Client's Corner - Mutual Funds - The Companies We Own. This is one of the best descriptions of owning a mutual fund. PDF

"My fortune is invested in profit-seeking enterprises managed by largely rational men and women who respond to the reality of price signals every minute of every day. Price signals sent out by seven billion people making economic and financial decisions in their own best interests." -Nick Murray, from NMI 2018-11

"It can be historically demonstrated that the best defense against retaining your purchasing power through retirement is to invest in a broadly diversified portfolio of the world's great companies. And the finest method of investing in them are good, long-term mutual funds." -Nick Murray


Three Filters

Watch Quick Mutual Fund Explanation + Four Filters VIDEO

  1. At least 50 years old.
  2. Fee is under 0.8%.
  3. Return since inception is at least 11%.