The cover story on this week's Barron's is likely to get attention for a long time, and may even serve to drive down the price of TheStreet.com (NASDAQ: TSCM), Jim Cramer's company. Journalist Bill Alpert takes a look at the track record for Cramer's picks on his show Mad Money.

According to Alpert, "a comprehensive and careful review of his stock picks by Barron's finds that his picks haven't beaten the market. Over the past two years, viewers holding Cramer's stocks would be up 12% while the Dow rose 22% and the S&P 500 16%, according to a record of 1,300 of the CNBC star's Buy recommendations compiled by YourMoneyWatch.com, a Website run by a retired stock analyst and loyal Cramer-watcher."

I would never dream of buying any stock based on Cramer's recommendation, and here's why: Warren Buffett, one of the greatest investors in the world ever, has often said that he can only find a few good investment ideas per year. All you need is a few in your life to do well. How about Jim Cramer? He gives a few stock picks per show, five days a week, and then gives dozens more buy and sell calls on the Lightning Round each week.

This flies in the face of what most people understand about the markets. We can argue about the extent of their efficiency (Burton Malkiel would argue that nearly every stock is perfectly priced all the time) but the idea that anyone, even a guy who bites heads off of bears, could find so many market inefficiencies each day is absurd. If Cramer can do that, how come almost no one can beat the market? Cramer makes it too easy -- except, according to the Barron's report, he doesn't really. He just pretends to on TV.

According to this weekend's Wall Street Journal, the rich are "bailing out" of hedge funds. Says Robert Frank, "In 2005, the world's financial millionaires (those with investable assets of $1 million or more, not including primary residence) had 20% of their investments in alternatives. In 2006, they cut that exposure in half, to 10%."

Of course, everyone is speculating about what it all means. Are the days of big returns from hedge funds over? Are we approaching a credit crisis, or another Long-Term Capital Management-style blow-up that will threaten the liquidity of the capital markets?

Here's another possibility that may be part of the explanation: Maybe astute, wealthy investors are realizing that hedge funds can't, on average, generate returns strong enough to justify the "2 and 20" compensation plans that make even mediocre managers exceedingly wealthy.

If scholars like Burton Malkiel are even close to being right about the efficiency of markets, hedge funds are a bad deal.

Burton Malkiel is one of the greatest investment thinkers of all time. Regardless of whether you agree completely with his landmark bestseller A Random Walk Down Wall Street, he provides a compelling case for a low-cost, low-turnover investment strategy as the road to wealth for most people. He had an interesting editorial in Monday's Wall Street Journal where he discussed the possibility of irrational complacency about the current status of the economy.

After going through a series of possible concerns for stock market investors (instability in the Middle East, the trade deficit, income inequality, etc.), he writes that "As a believer in efficient markets, I hesitate to conclude that our markets are being irrationally complacent. I believe that markets are high and risk spreads compressed because of massive increases in world liquidity...So what should investors do as the Dow rises to new highs? Should they "sell in May and go away," as one stock-market bromide suggests? As a student of markets for over 50 years, I am convinced that attempting to time the market is a fool's game. But new highs in the market should induce investors to review their asset allocations. If the rising stock market has pushed your allocation of equities well above the level consistent with your risk tolerances, it makes sense to consider rebalancing..."

He also cautions that investors are unlikely to make money in the long-run betting against the strength of the U.S. economy. His investing strategy has remained essentially unchanged since his book was originally published in 1973, and it's a strategy that has outperformed the vast, vast majority of market pundits with a lot less work.

I'm inclined to agree with his advice for investors -- Don't jump in and out based on the market's movement. Rebalance annually and relax. And read Malkiel's book.

Red Sox or Yankees? Mitt Romney or Hillary Clinton? Sanjaya or one of the talented singers? These are the important issues of the day that normal people debate. Then there are people like us writers at BloggingStocks who ponder questions like "Traditional index funds or fundamental index funds?" Marketwatch's Paul Farrell wrote an excellent piece discussing this very debate, and now I'm going to give you my take on it.

First of all, some quick definitions:

Index Fund: Pioneered by John Bogle, these are mutual funds (or, ETFs) which seek to closely mimic the performance of a certain index, such as the S&P 500 or the Wilshire 5000 by simply owning the stocks that are in that group. Characterized by low expense ratios and minuscule turnover, index funds outperformed the vast majority of actively managed funds over the long-term, and I believe that they have a place in the retirement portfolio of every single working man and woman in America.

Fundamental Index Funds: This is a new hybrid of sorts, combining elements of index funds and active management. Basically, people have noticed that stocks with certain quantitative principles outperform over the long-term: For instance, stocks with low price-book ratios, low price-earnings ratios, high yields, etc. Other fundamental index funds are cap-weighted which means that stocks with larger market caps are represented more heavily than stocks with smaller market caps, as opposed to weighting based on share price.

And now, my opinion: I say you stick with the traditional index funds, at least for now. Here's why, according to John Bogle and Burton Malkiel, two of the greatest proponents of passive investing:

While index [mutual] funds also incur expenses, they are available at costs below 10 basis points. The expense ratios of publicly available fundamental index funds range from an average of 0.49% (plus brokerage commissions) to 1.14% (plus a 3.75% sales load), plus an undisclosed amount of portfolio turnover costs. The portfolios of market-weighted index funds are automatically adjusted for changes in the market caps of their portfolio holdings, and they require no turnover.

Furthermore, I would argue that fundamental indexing may kill the very outperformance that it seeks to take advantage of. Think about it: If investors pour billions of dollars into these funds to invest in stocks that match the ratios the funds are seeking, these stocks will be bid up so that they are no longer bargains. If investors seek out stocks with high yields en masse because they outperform, they will stop outperforming very quickly.

And then there's Jeremy Siegel, one of the leading proponents of fundamental indexing. While I thoroughly enjoyed his book The Future For Investors, Berkshire Hathaway Vice-Chairman Charlie Munger, one of the greatest minds in investing, had this to say about Mr. Siegel at a recent Berkshire annual meeting: "I think he's demented. He tries to compare apples and elephants in making accurate projections." Well then.

I'm a little bit hesitant to write a review of Gerald Appel's latest book Opportunity Investing: How to profit when stocks advance, stocks decline...inflation runs rampant, prices fall, oil prices hit the roof...and every time in between. I consider myself a bottom-up fundamentals investor, and this essentially a book about investing based on macroeconomic trends with a lot of market timing information (but also some good background on economics). So I am probably not the target audience for this book.

That said, it's a pretty good guide to a style of investing that some will be more inclined to embrace than others. If you're a foreign policy junkie (you read The Economist, listen to All Things Considered, and enjoy the New York Times more than the Wall Street Journal), this is probably a book and a style of investing that will appeal to you.

The best thing about this book is that essentially presents a self-contained, one-volume source for a strategy of big picture investing. Chapters include "The Myth of Buy and Hold," "Putting Together a Winning Portfolio," "Income Investing," and sections about market timing (which is generally interspersed throughout the book), and exchange traded funds (for a terrific introduction to ETF's, check out Gerald Appel's son Martin Appel's book Investing with Exchange-Traded Funds Made Easy).

For a nice contrast, read this book along with the new edition of Burton Malkiel's A Random Walk Down Wall Street, as the books seem to contradict each other on nearly every single point. Appel believes that market timing and the study of charts and historical returns hold the key to the bright elusive butterfly of market-beating returns (also know as Alpha, in the parlance). Gerald Appel and Burton Malkiel are two of the most articulate spokesmen for these two radically different schools of thought. A televised debate would be one of the most fascinating television specials of the year (to me anyway...perhaps not so much for the Desperate Housewives crowd).

For those of you who haven't read Burton Malkiel's Random Walk Down Wall Street, the ninth edition will be coming out on January 22nd. The Princeton professor's book was hugely controversial (among the few of us who actually care about this stuff) when it debuted 34 years ago, and much of Malkiel's wisdom is still far from widely accepted today. Among the core tenets of his philosophy:

• Low-cost index funds are better than actively managed mutual funds.
• Technical analysis is often not accurate. Active trading will too often result in losses.
• Fundamental analysis isn't a whole lot better.

The book is important to read because, regardless of whether you agree with these ideas entirely (I don't necessarily), they are MOSTLY true. Most stocks are fairly priced, most active traders lose money, and there's a strong case to be made for not trying to pick money managers. If Malkiel is wrong, it's because occasionally, markets are inefficient. But to exploit those inefficiencies, I think investors need to understand the concept of efficient markets. Sadly, I think most retail investors don't.

And what if Malkiel is right? If markets are efficient, should we give up the practice of trying to pick stocks? Even Malkiel wouldn't go that far. In an interview on Wall $treet Week a few years ago, he was asked what he meant when he said that "investing is sort of like making love." Malkiel answered: "...Even if you admit to yourself that you can't do it any better than the next guy, you sure don't want to give it up."