(MONEY Magazine) – A couple of days ago, as we began our 25th year publishing MONEY, I came across this quote while flipping through our second issue in November 1972: "Mutual funds offer the serious-minded long-term investor an almost perfect way to invest in the stock market." The article by noted investing expert Charles D. Ellis cut against the opinion of the time; small investors were bailing out of funds and fleeing the market. In the prior four years, trades by individuals on the New York Stock Exchange had plunged 39%, and they then held stocks worth only $39 billion, a mere 5.5% of the Big Board's total valuation. Yet Ellis insisted that nearly all small investors "would be well advised...to invest in mutual funds."

The quote jumped out at me. Not only has history proved that Ellis' advice was extremely wise, but it reminded me that back then MONEY was nearly the only financial publication telling average readers that the best way to achieve a measure of financial security--such as the rich enjoyed--was to start investing. MONEY delivered that message effectively and often over the years. It is fair to say that no other publication did more to transform the U.S. from a country of penny-wise savers into a nation of dollar-smart long-term investors who helped build our vast, vibrant and remarkably stable financial markets.

The Medill School of Journalism's George Harmon, who was a business writer at the Chicago Daily News in 1972, put it this way to reporter Joan Caplin: "MONEY showed that you no longer had to be a guy in horn-rimmed glasses and pinstripes to know something about money. You could just as well be standing in your kitchen baking bread."

Fact is, more than a decade passed before the general public began to accept stocks as their best long-term investment. By 1982, typical small investors still had around 38% of their money parked in low-interest certificates of deposit and less than 1% in equity funds.

Today, by contrast, individuals have more money in equity funds (14%) than they do in CDs (11%). Furthermore, with investors pouring in an average of $4 billion a week in 1996, total fund sales figure to exceed $200 billion for the year, up from $79 billion only four years ago.

There's no question about it: Individual investors like you have become the most powerful force in the investment world. Your steady money has helped propel the stock market to a series of record highs for the past six years without a 10% decline. Common sense tells us that this heavenward rise will not go on much longer. On average, the market dips 10% once every 24 months, so the next major market move may well be down 15%, as our chief investment strategist Michael Sivy contends (see page 152 for his latest forecast).

Such a decline would not be especially remarkable. However, some professional Wall Street pessimists are warning that inexperienced individuals might turn and run at their first sight of red ink, pulling the market to bloody depths along with them, even though small investors didn't panic during the crash of 1987.

These pessimists are off base for two reasons. First, a great number of small investors haven't just rushed into the market with their first investments in the past few years. They have marched in during the past decade or longer. Second, they have been educated by MONEY, and many other personal-finance sources, to continue to invest consistently whether the market rises or falls; in fact, you make your best bargain purchases when the market is declining. Think back to the '87 crash. Individual equity investors redeemed only 3% of their money in October 1987. The investors who ran screaming from the market, which fell 25% that month, were the professionals. In other words, the Wall Street pros who displayed the least investing maturity then are now fretting about the individual investors who showed the most.

Small investors have learned from MONEY and others, for example, that if you invest a fixed amount year after year in an equity mutual fund that tracks the market you will earn somewhere between 10% to 12% in five to seven years--even if you always put your money in on the very day it reaches its peak for the year. Beyond that, if you had simply put $10,000 into an index fund in 1982 to match the market and just kept it there, you would have $70,000 today, despite the crash and the 1990-91 bear market.

We have never said you can't lose money investing now and then. Of course you can, and you probably have on some investments, just as I have. What we have emphasized is the message Charles Ellis delivered so clearly in our second issue: You would be wise to invest long term. That idea remains as timely today as it was 25 years ago.