No - a mutual fund may have a hundred or more stocks in their holdings. If it isn't a "sector" fund that focuses on a narrow segment of the market - the mutual fund may be buying a company in an industry and selling its competitor - buying Ford and selling GM - buying Pepsi and selling Coca Cola - buying IBM and selling HP etc. Most actively managed funds are trying to beat the market by finding stocks that out-perform. So the movement of the market as a whole is not as closely correlated to the performance of the mutual fund.

In an index fund, the whole purpose of the fund is to mimic the index's performance so there's no active management. There's a debate about the merits of actively managed funds but the simple truth is that they can outperform the market or seriously underperform the market because they are trying to find the top performing stocks which makes them develop a herd mentality - all dumping the "bad stocks" and buying the "good stocks" at the same time. Take Whole Foods Market - dumped this week for not meeting expectations ..

If you are interested in "investing" go to assetbuilder.com and read about Couch Potato Portfolios.

Low fee ETF's are a good way to go. ETF's have the diversification of mutual funds but they generally (not always) have lower fees to you the investor.

"Unlike stocks, where prices are moved by the supply and demand forces of the marketplace, mutual fund prices are determined by the value of the underlying securities in the fund."

Isn't the value of each underlying security determined by the supply and demand forces of the marketplace? So isn't the above