I mentioned this back in October, but it bears repeating: Don't buy mutual funds right now.

This month will see a huge outpouring of dividends and capital gains from mutual funds in the form of year-end distributions. Portfolio managers have spent the last month sprucing up their portfolios (your portfolios), aligning them with those hottest of the hot sectors so you'll like what you see they've invested in come annual report time. They've also just about run through all their losses from the dot com bust.

The end result is sure to be enormous returns of capital. These are returns you'll have to pay taxes on if you buy these securities right now. Be smart. Rather than buy $100 worth of fundX now and paying taxes on the distribution, wait until after the distribution and buy your $100 worth. You'll get more shares of fundX for your money and a lighter tax bill.

On the flip side, if you have been thinking of selling those shares of fundX, what are you waiting for? Now's the time to do it, before you get stuck with paying the taxes on the distribution.