When I was a wee lad growing up on the cement playgrounds of Brighton Beach, Brooklyn, someone was always making fun of someone else. And sometimes even the toughest kids would shed a tear because of a particularly stinging comeback. Inevitably, it was then that a third party would chime in with that supreme commandment of schoolyard mockery: If you can't take it, don't dish it out.

This old piece of street wisdom comes to mind as I kick off this column, because I'll be dishing it out with the generosity of a young Kris Kringle on his first night of work. So you guessed it, dear Fools -- the first joke is on Yours Truly and what I consider to be the dumbest post in the history of Fooldom. Back in July 2001, I was so excited by America Online's partnership with Amazon.com (NASDAQ:AMZN) that I predicted AOL's stock would skyrocket. Or as I put it then: "[T]he bad boys of the Internet -- Case, Levin, Pittman -- are going to turn this monster juggernaut into a hundred-dollar stock."

Jiminy cricket! That call stunk so bad I just had to plug in a Glade air freshener. To be fair, though, I had been working on my triple somersault slam dunks that day with my crystal ball, and it was a little dinged up.

But enough about me .
Speaking of dinged-up, let's turn our attention to the mutual fund industry. You may have just scratched your head at this last line, wondering what exactly is "dinged up" about the mutual fund industry. In fact, I'm amazed by the number of people I meet at cocktail parties (and I count BBQs and hardware store lines in this category) who believe that mutual funds are perpetually thriving, risk-free investments. Some of these mutual fund fans will even tell me proudly that they don't play the stock market. They just "do" mutual funds like hairy teens do neon green soda.

I always enjoy asking these folks questions like, "Oh, cool. Who's your favorite fund manager?" and "Does he take a big load?" A hint of fear will fill their eyes as they wonder whether this is merely a wildly inappropriate joke or rather a constructively satirical joke. (To learn the answer, read this.) Inevitably, most fund fans will turn the subject away from their investments to something they know more about, like astrophysics or how to correctly pronounce "Goethe" without feeling pretentious.

The truth about mutual funds
The funny thing here is the massive disconnect between the average investor's confidence in mutual funds and their actual performance. There are roughly 8,000 funds out there, and it's estimated that some 6,000 lose to the market average. That statistic should not inspire confidence. Rather, it should inspire a long, hot shower with a generous dosage of bodywash. Yet millions of investors are walking around with the greatest confidence in their funds.

How has this happened? The same way I've been snookered into using "bodywash" even though I have no clue what it is or how it improves upon my soap. The answer, of course, is advertising. Yes, advertising. Mutual funds are a gatrillion dollar industry, and their handlers have expelled the most laughable collection of solemn, noble, and trustworthy imagery since the heyday of Communism.

Build your own mutual fund ad campaign
Mutual fund imagery generally includes one or more of the following: ancient gods, founding fathers, Native Americans, rocks, stones, mountains, golden scales, sailing vessels, interlocking hands, chess pieces, stagecoaches, oak trees, evergreen forests, eagles, lions, bulls, rams, whales, or beloved cartoon dogs. They have proud, adventurous, and trustworthy names such as Pioneer, Prudential, Lord Abbett, Heartland, and my personal favorite, the woefully awkward The Hartford. As if all of this solemn pageantry wasn't enough to drive the point home, these proud companies don't hawk their wares in batches, buckets, or even groups. Oh, no. Mutual funds come in "families." You know, like the Waltons.

Within each family you'll find funds -- pardon me, family members -- with impressive power words in their windy titles such as aggressive, dynamic, master, ultra, strong, emerging, specialty, and the linguistic one-two punch that best suits my own essential being, precious metal. I have to tell you, bathing in all of this mutual fund imagery has been so inspiring I've had to pop out of my chair and march around my office several times just to burn off some energy.

Now, build your own accurate ad campaign
Still, when comparing the peacock-like bluster of the mutual fund industry to its dismal performance, one longs to see mutual funds given names that more accurately reflect the value they provide, as a whole, to investors. If this were the case, we'd surely see funds with names such as:

  • The Famous Companies at Horrendous Prices Blue Cow Chip False Opportunity Fund
  • The Giggling Walrus Shameless Fee Reverse Robin Hood Wealth Transfer Fund
  • The Wormy Apple & Senseless Turnover Mathematically Impossible to Enrich Anyone Including Us Fund
  • The Liquored-Up Monkey Chucking Darts Off a Pogo Stick Capital Devastation Fund

Boy, oh boy. With names like these, advertising agencies would have to break out some really shiny brochures and moving commercials to lure investors.

I kid because I love
Of course, I'd be remiss if I didn't say that there were some good mutual funds out there. Yeah, they're called indices. Zing. Seriously, "Buy an Index Fund" is some of the best advice you can get as a beginning investor. Good ones, such as the Vanguard 500 (FUND:VFINX) and Vanguard Total Stock Market (FUND:VTSMX), are low-cost and will provide you with immediate diversification and exposure to market heavyweights such as Allstate (NYSE:ALL), ConocoPhillips (NYSE:COP), and Home Depot (NYSE:HD).

Of course, the rub with index funds is that they'll trail their benchmark by whatever fees they charge. So if you hope to beat the market (and seriously, who doesn't), consider doing the work and finding some of those awkwardly named, symbolically reassuring funds that actually do deliver the goods. Yes, they exist, but they're few and far between. How can you find them? Here are the three keys that Fool fund guru Shannon Zimmerman uses in his market-beating Champion Funds investing service:

  1. Low expense ratio.
  2. Long manager tenure.
  3. Solid track record of performance.

That's the market-beating recipe that some 6,000 mutual funds refuse to follow. And if you'd like some help finding the ones that do, your free 30-day guest pass to Champion Funds is available by clicking here. There's no obligation to subscribe.

Fool contributor Daniel Joshua Rubin is a Los Angeles-based comedy writer. He doesn't own shares of any company mentioned in this article. Amazon is a Motley Fool Stock Advisor pick, while Home Depot is a Motley Fool Inside Value pick. This message is brought to you buy the Fool'sdisclosure policy.