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  • FIRST POST
    • capital0ne
    • By capital0ne 3rd Dec 17, 4:01 PM
    • 146Posts
    • 80Thanks
    capital0ne
    Investing Myths - 1
    • #1
    • 3rd Dec 17, 4:01 PM
    Investing Myths - 1 3rd Dec 17 at 4:01 PM
    Past performance is no guide to the future.

    To adapt the old chestnut, there are three great lies in life: the cheque is in the post; Iím
    from the government and Iím here to help you; and past performance is no guide to the
    future. A momentís thought shows you how silly the last statement is. Were it true, we
    could abolish examinations, references and almost every other means of distinguishing
    between the options open to us.

    Past performance is not a perfect guide to the future, but itís the only one weíve got and it
    can give us useful information. Do we want to invest in small companies? Then we go for
    proven small company managers. Do we want yield? Then we go for income managers
    with good track records. And so on.
Page 1
    • Prism
    • By Prism 3rd Dec 17, 4:13 PM
    • 53 Posts
    • 29 Thanks
    Prism
    • #2
    • 3rd Dec 17, 4:13 PM
    • #2
    • 3rd Dec 17, 4:13 PM
    Agreed. I picked most of my current funds by looking into the history of the funds and their managers before looking into the type of companies they invested in and if I would invest in those companies myself. The past performance definitely guided me to these funds and I have done well from them.

    I do understand why this statement has to be simple though whereas the reality is a little more complex
    • fun4everyone
    • By fun4everyone 3rd Dec 17, 4:19 PM
    • 850 Posts
    • 1,385 Thanks
    fun4everyone
    • #3
    • 3rd Dec 17, 4:19 PM
    • #3
    • 3rd Dec 17, 4:19 PM
    I take that statement to warn people you can't literally expect the same. IE if one fund went up 80% in 3 years, it cannot be expected to do the same over the next 3 years.

    As already stated the reality is that it is complex and long term trends can be seen from past performance. Stuff like smaller companies doing better over the long haul, emerging markets doing better over the long haul, certain active fund managers adding performance and so on.
    • BananaRepublic
    • By BananaRepublic 3rd Dec 17, 9:56 PM
    • 924 Posts
    • 665 Thanks
    BananaRepublic
    • #4
    • 3rd Dec 17, 9:56 PM
    • #4
    • 3rd Dec 17, 9:56 PM
    Past performance is no guide to the future.

    To adapt the old chestnut, there are three great lies in life: the cheque is in the post; Iím
    from the government and Iím here to help you; and past performance is no guide to the
    future. A momentís thought shows you how silly the last statement is. Were it true, we
    could abolish examinations, references and almost every other means of distinguishing
    between the options open to us.

    Past performance is not a perfect guide to the future, but itís the only one weíve got and it
    can give us useful information. Do we want to invest in small companies? Then we go for
    proven small company managers. Do we want yield? Then we go for income managers
    with good track records. And so on.
    Originally posted by capital0ne
    Your past performwnce is clearly a good guide to your future performance. I look forward to more silly threads.

    Your second paragraph sums up what I suspect most intelligent people believe. But past performance is not an accurate guide, and needs to be interpreted carefully.
    • DiggerUK
    • By DiggerUK 4th Dec 17, 7:10 AM
    • 2,811 Posts
    • 2,700 Thanks
    DiggerUK
    • #5
    • 4th Dec 17, 7:10 AM
    The myths are real
    • #5
    • 4th Dec 17, 7:10 AM
    ďPast performance.....Ē is a get out of jail free card that translates as, Ďwell...I did warn you, now sod offí

    The claims that investing in equities long term is safe and solid, and all the downs will eventually become ups, is a trick and a half. This trick is accomplished by use of the historic tables of bourses.....which always go up over time .........of course.

    As the devil is in the detail, and that detail is so visible, it has to be pointed out how the trick is done. All the losers and underperformers are weeded out, leading to an ever inflating valuation of those markets.

    Cue the usual suspects..._
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • Linton
    • By Linton 4th Dec 17, 9:06 AM
    • 8,622 Posts
    • 8,591 Thanks
    Linton
    • #6
    • 4th Dec 17, 9:06 AM
    • #6
    • 4th Dec 17, 9:06 AM
    The adage about past performance being no guide to future performance is most commonly applied to funds within a given sector. A 1st quartile fund 1 year can often be a 4th quartile fund the next. Look at the results from a certain well known income fund manager.

    It is less applicable to individual sectors and shares which can be more affected by long term trends.

    Sometimes a fund manager with a focussed style can latch onto a long term trend with spectacular results (eg Andrew Bolton with Fidelity Special Situations in the 1990s and also possibly Terry Smith with Fundsmith more recently) but this is rare.
    • badger09
    • By badger09 4th Dec 17, 11:37 AM
    • 5,579 Posts
    • 4,888 Thanks
    badger09
    • #7
    • 4th Dec 17, 11:37 AM
    • #7
    • 4th Dec 17, 11:37 AM
    Your past performwnce is clearly a good guide to your future performance. I look forward to more silly threads.

    Your second paragraph sums up what I suspect most intelligent people believe. But past performance is not an accurate guide, and needs to be interpreted carefully.
    Originally posted by BananaRepublic
    I don't. And I suspect I'm not the only one
    I'm a supporter of dunstonh
    • Biggles
    • By Biggles 4th Dec 17, 11:45 AM
    • 7,515 Posts
    • 4,908 Thanks
    Biggles
    • #8
    • 4th Dec 17, 11:45 AM
    • #8
    • 4th Dec 17, 11:45 AM
    I don't. And I suspect I'm not the only one
    Originally posted by badger09
    I think there have been enough already. I dread 'Investing Myths - 2'.
    • A_T
    • By A_T 4th Dec 17, 12:02 PM
    • 235 Posts
    • 119 Thanks
    A_T
    • #9
    • 4th Dec 17, 12:02 PM
    • #9
    • 4th Dec 17, 12:02 PM
    I think there have been enough already. I dread 'Investing Myths - 2'.
    Originally posted by Biggles
    suspect it depends on whether it's a dismal day or not
    • TBC15
    • By TBC15 4th Dec 17, 1:00 PM
    • 264 Posts
    • 87 Thanks
    TBC15
    Oh, it's such a dismal day
    I'm glad I spend it with you
    Oh, such a dismal day
    You just keep me hanging on
    You just keep me hanging on
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