But Don't Forget the Big Picture

To make money in financial markets, "being in the right place" is the single most important step you can take, says Hildegard Zagorski, an analyst at Prudential Securities. Without that, all the steps you take to lower your costs won't really help you achieve gains.

"You've got to have your money invested in the right asset class and in the right sector class," Ms. Zagorski says. "If stocks are where the money is being made, you don't want all your money in bonds. And if you go to stocks, you must have your money in the sectors where total return is rising." Right now, she says savvy investors "are shifting from big blue-chip stocks to small-cap and mid-cap stocks." And "bonds are looking better."

Indeed, the the past three months, investors have reaped big gains by thinking small. For the period July 1 through Friday, the Standard & Poor's indexes that track small and mid-size companies are each up 15 percent, versus less than 7 percent for the large companies in the S&P 500 index.

Seattle investor Shawn Splane is not surprised. He anticipated the shift from blue chips last year and repositioned some of his money.

"I thought all the craze on the S&P 500 index was getting way out of hand," he says. So Mr. Splane and his wife shifted from an S&P 500 index fund to a total stock market index fund, which spans companies of all sizes. And he did it economically: He made the shift through a tax-sheltered retirement account, "to avoid a taxable event" for his 1996 income taxes.

Splane now has 11 stock funds, eight domestic and three foreign or global. He's wary of funds with positions in Asia, given currency turmoil there. But since he rebalanced his accounts last year, he's not pulling out of any of his funds for now.

Not doing so, he says is a major way of lowering expenses. "If you pull out of a fund, you have to make not one but two correct decisions: You have to know exactly when to get out. And you have to know exactly when to get into another fund." Besides, Splane believes there's a lot of play left in this bull market, particularly for those small and mid-size firms.