Lazy Portfolios
In investing, it can be good to be a little bit lazy. To do well, you don't need to trade every day or watch the prices fluctuate by the minute. You can just pick a few well-chosen mutual funds, contribute regularly (preferably with a monthly automatic investing plan) and rebalance just once, or twice a year at the most.
Paul Farrell, of Marketwatch, has been tracking a few Lazy Portfolios for a few years now. They vary from having as many as 11 mutual funds in a portfolio to as few as 3. All of these portfolios have beaten the standard S&P 500 benchmark for the last 1, 3, and 5 year periods ending July 2006.
One thing to consider though, the more funds your lazy portfolio has, the more transactions you need to do. Be careful that your transaction fees don't add up to too much. Also, it may be easier to implement a lazy portfolio in a 401(k) or other retirement account. For non-retirement accounts, consider something even simpler, such as a targeted date retirement fund.