Week 51 Day 3: Chasing Performance: Last Year's Winner Is Next Year's Loser

Investors consistently pour money into funds and asset classes that performed well recently and pull money from those that performed poorly. This is the exact opposite of 'buy low, sell high.' Morning...

Investors consistently pour money into funds and asset classes that performed well recently and pull money from those that performed poorly. This is the exact opposite of 'buy low, sell high.' Morningstar data shows that 'hot' funds -- those with the highest recent returns and largest inflows -- consistently underperform over the next 3-5 years. Past performance does not predict future results. It often predicts the opposite.