Plus if you own a lot of shares of one stock and it goes down, you've just lost a lot of money. Mutual funds have solved all those problems for you. Funds typically invest in 50 to 200 different securities, so if a handful of them go down in value, it really doesn't affect your fund's performance that much because of the diversification they can maintain. Yours and everybody else's mutual fund will drop. This is the time when you want to buy more shares if possible.
Risk Management Let's talk about another aspect of funds which is risk level.
No matter what investment, stocks, gold, bonds, bank CD's, their is always a risk factor. High risk investments like stocks or futures carry the potential to make a lot of money, but they also carry the potential to lose all your money. It's like this. On the other hand, bank savings accounts are very low risk, but the return on your investment is almost nothing. Money Market Funds are relatively low risk.