Excerpted from Common Sense on Mutual Funds by John C. Bogle, pages 103-104

When you have identified your long-term objectives, defined your tolerance for risk, and carefully selected an index fund or a small number of actively managed funds that meet your goals, stay the course. Hold tight. Complicating the investment process merely clutters the mind, too often bringing emotion into a financial plan that cries out for rationality. I am absolutely persuaded that investors' emotions, such as greed and fear, exuberance and hope - if translated into rash actions - can be every bit as destructive to investment performance as inferior market returns. To reiterate what the estimable Mr. Buffett said earlier: Inactivity strikes us as intelligent behavior. Never forget it.

The key to holding tight is buying right. Buying right is not picking funds you don't fully understand; it is not picking funds on the basis of past performance; it is not picking funds because someone tells you they're hot or because they have managers who have been stars, or even because they have been awarded five Morning-stars; and it is most assuredly not picking high-cost funds. If you have avoided these fundamental errors, then simply keep an eye on how your fund performs. If you chose intelligently in the first place, an annual performance appraisal ought to be just fine. And patiently tolerate periodic nonextreme shortfalls relative to the fund's peers. A major event - an extended aberration in a fund's performance, a radical shift in its policy, a merger of its management company, a fee increase or the imposition of a 12b-1 fee - all should set off alarms. But, if I may modify the familiar phrase about investigation before you invest, I would urge: Investigate before you divest.

Don't select funds as if they were simply individual common stocks, to be discarded and replaced as they face the inevitable ebb and flow of performance. Select a fund with the same thoughtful consideration you would give to appointing a trustee for your assets and establishing a lifetime relationship. That approach is the very essence of simplicity. Decades ago, many of America's wealthiest families chose a single trustee or investment adviser to look after their entire estates and to remain with them ever after. An investment account in a broadly diversified mutual fund is, in truth, neither more nor less than a diversified trust fund (except that the mutual fund is usually even more diversified). Suppress the temptation to add redundant layers of diversification. While you're at it, demand that the industry provide you with mutual funds that measure up to a high level of trusteeship responsibility. You deserve it.