We've heard a lot about falling stock prices since the onset of the crisis, but not so much about how retail investing in general might be changed longer term by all this. Yesterday, I had lunch with a well known hedge fund manager who believes that the mutual fund industry may be next to fall in the downturn, as people have become so disenchanted with the low returns and steep fees. Even before markets plummeted, there were plenty of people writing about the nose-bleed fees charged by investment advisors and many mutual funds (despite the fact that the majority of them tend to under-perform their respective indexes). And of course, lots of people are now questioning the entire cult of equity, and, for that matter, the business media culture built upon it -- perhaps the most memorable example of that was Daily Show Jon Stewart's public flogging of CNBC's Jim Cramer over his bad stock calls.

Stewart isn't the only one bashing Cramer. In the March/April 09 Yale Alumni magazine, Yale's brilliant chief investment officer David Swensen blasts not only Cramer but most of the fund industry too: "Look at Fidelity and Schwab with their full-page advertisements. Or Jim Cramer. The investor is bombarded with staggering amounts of information, staggering amounts of stimuli, that are designed to get the investor to buy and sell and trade, to do exactly the wrong thing, to create excessive profits for these intermediaries that aren't acting in the investor's best interests." This reminds me of Black Swan author Nassim Taleb, who said much the same thing when I interviewed him recently in Newsweek.

Swensen goes on to call the mutual fund industry a "marketing industry" rather than an investment management industry, and recommends that people invest on the basis of asset allocation -- figure out what percentage of your money you want in stocks, bonds, etc, then buy index funds or exchange traded funds that get you there cheaply. Seems like more than a few folks are already taking his advice -- the combined assets of American mutual funds have been falling for months, not only because of losses, but also because of large withdrawals.