Name that company

I’m one of America’s largest department store retailers. Based in Cincinnati and New York, I trace my roots to 1830. Today I operate more than 450 stores in 34 states, and my annual sales top $15 billion. My stores’ names include Macy’s, Bloomingdale’s, Bon-Macy’s and Burdines-Macy’s. My Macy’s store in Manhattan’s Herald Square was the setting of the “Miracle on 34th Street” movie. It became the world’s largest store in 1924, the year of my first Thanksgiving Parade, viewed by 10,000 people. I spent some of the ’90s in bankruptcy. Who am I?

Last week’s answer: Papa John’s Pizza

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Stocks vs. funds

I’ve considered investing in stocks for some time now, but I have mutual funds that are fairly diversified. Is there added value in investing in individual stocks? — M.R., Bonaire, Ga.

Individual stocks can boost your portfolio’s performance, but only if you take the time to learn how to evaluate and choose them carefully. For most investors, stock market index mutual funds are probably best, delivering returns that roughly match those of the market.

You can aim to beat the market by investing in individual stocks because they can counteract the extreme diversification of most mutual funds. If your fund is invested in 200 different companies, your money is spread very thin across many holdings. If one of them doubles in value, the effect on the fund’s value likely will be fairly minor. But if you’ve invested, say, 5 percent to 10 percent of your money in a single stock, if it doubles, it will boost your bottom line in a noticeable way. Although if it falls, there also will be a noticeable effect.

For many people, a good compromise might be to invest the bulk of their money in a stock market index fund (such as one based on the S&P 500) and to invest in a few select stocks on the side. Learn more at www.indexfunds.com and via our How-to Guides at www.FoolMart.com.

If a mutual fund closes to new investors, is that a sign to keep or sell it? — C.L., Mobile, Ala.

Funds often are closed because the fund managers have more dollars to invest than great investments to park them in. When a fund grows enormous, it gets harder for managers to earn high returns because they have to spread the money out more.