But some rules must occasionally be bent. If you're on the road and the only alternative to Mom's is a disreputable-looking place called Grandpa's Greatest Grits, Mom's may be your best choice. Likewise, postponing stock fund investments until 2001 might not be a good idea. By now, most fund investors are familiar with the drawbacks of late-year investing. By law, mutual funds must pass on the profits from sales of stocks in their portfolios to shareholders by the end of the year.
Distributions typically arrive during the fourth quarter.
This year, though, many funds are dishing out the pain early. Md. Staying out could cost you some big year-end gains. There's no guarantee the same thing will happen this year. But if it does, it could mark the only real gains in what has been a sluggish year for stocks. Fortunately, there are ways to keep your toes in the pond.