By KATHLEEN GALLAGHER

Does the little guy have a chance?

That's the question investment manager Harry B. Banzhaf is pondering.

Small investors have been beaten down by a decade of flat returns for U.S. stocks. Meanwhile, Banzhaf says he's got no confidence left in Wall Street, corporate governance and current federal government policies.

That raises the question of whether long-term investing is a reasonable strategy, and makes some wonder whether it's just plain foolhardy for individual investors to keep plowing their hard- earned cash into stocks, said Banzhaf, president of Harry B. Banzhaf & Co. in Milwaukee.

He said he sees just one way out of this gloomy conundrum: faith.

"To make a case for long-term investing, the individual investor can invest based on a certain amount of faith in our country and ourselves," Banzhaf said. "You're betting on your optimism."

That was the mind-set of billionaire investor Warren Buffett last week when he said he would make a $34 billion acquisition of Burlington Northern Santa Fe Corp., calling it "an all-in wager on the economic future of the United States."

To act on that faith, Banzhaf suggests using low-cost exchange- traded funds. ETFs trade like stocks and are priced continuously throughout the day. Because international investments are becoming a more permanent part of U.S. investors' portfolios, Banzhaf said he would make sure that component was there.

He uses Vanguard because it has good corporate governance, a focus on low-cost investments, lots of experience indexing, and a practice of holding most stocks in an index so there's better potential for results to mirror the performance of that index.

Banzhaf said he would hold both Vanguard Total Stock Market ETF (VTI, $53.95) and Vanguard FTSE All-World ex-US ETF (VEU, $43.44).

Vanguard Total Stock Market ETF tracks the MSCI US Broad Market Index, which consists of all the U.S. common stocks traded regularly on the New York Stock Exchange and the Nasdaq over-the-counter market. Vanguard FTSE All-World ex-US ETF tracks the performance of an index with the same name that covers about 2,200 stocks of companies in 46 countries.

Investors who are looking for an even simpler way to express their faith and cover the world might choose another option, Banzhaf said.

Vanguard Total World Stock Index ETF (VT, $42.21) tracks the performance of the FTSE All-World index, a market-capitalization- weighted index designed to measure the market performance of large- and mid-capitalization stocks of companies around the world. The fund normally holds more than 2,900 stocks.

"You could put together a very do-able portfolio with cash, Vanguard Total World Stock Index ETF and Vanguard Total Bond Market ETF (BND, $79.08)," Banzhaf said.

The biggest concern Banzhaf has with the World Stock Index ETF is market risk.

"There's no place for the money to go. They're printing it, and the economy isn't using it," he said.

He's cautious on stocks, so Banzhaf said he would buy in slowly to this fund, which he expects will perform in line with the market.

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