The Intelligent Investor “ Learn every day , but especially from the experiences of others . It ’ s cheaper !” — John C . Bogle What Experts Say about “ Past Performance ”
The Intelligent Investor “ Learn every day , but especially from the experiences of others . It ’ s cheaper !” — John C . Bogle What Experts Say about “ Past Performance ”
Bogleheads ’ Guide to Investing : “ Using past performance to pick tomorrow ’ s winning mutual funds is such a bad idea that the government requires a statement similar to this : ‘ Past performance is no guarantee of future performance .’ Believe it !”
JPMorgan Chase claimed 97 % of their alternate-asset mutual funds beat their benchmark during the 10-year period ending December , 2013 . Morningstar reported that only 33 % beat their benchmark during the same period ( pastperformance calculations differ ).
Christine Benz , Morningstars Director of Personal Finance : “ When we look at our data , at the factors that are most predictive of good performance going forward , low costs are a much better predictor than is great past performance .”
Morningstar : “ The star rating was not designed to have predictive ability about future performance .”
Peter Lynch ’ s Fidelity Magellan Fund ( FMAGX ), once the world ’ s largest and most successful mutual fund , is now in the bottom 10 % of its category ( Sept 7-2016 ) for 10-year return .
Bruce Berkewitz , manager of the Fairholme Fund ( FAIRX ), was Morningstar ’ s Manager of the Decade in 2009 . In March , 2016 the Fairholme Fund was in the bottom 1 % of all funds in its category for 1-year ; 3-years ; and 5-years .
Wm . Bernstein , author of The Four Pillars of Investing : “ For the 20 years from 1970 to 1989 , the best performing stock assets were Japanese stocks , U . S . small stocks , and gold stocks . These turned out to be the worst performing assets over the next decade .”
Jack Bogle : “ The biggest mistake investors make is looking backward at performance and thinking it ’ ll recur in the future .”
Jack Brennan , former Vanguard CEO : “ Fund ranking is meaningless when based primarily on past performance , as most are .”
Burns Advisory tracked the performance of Morningstar ’ s five-star rated stock funds beginning January 1 , 1999 . Of the 248 stock funds , just four still kept that rank after ten years .
Ben Carlson , author of A Wealth of Common Sense : “ Dow Jones looked at nearly 2,900 active mutual funds . Only 2 funds in the top quartile stayed in the top quartile of performance over the next four 1-year periods .”
Andrew Clarke , author : “ By the time an investment reaches the top of the performance tables , there ’ s a good chance that its run is over . The past is not prologue .”
Jonathan Clements , author & former Wall Street Journal columnist : “ Suppose you picked stock funds that ranked in their category ’ s top 25 % over the past five years . A regular updated study suggests that less than a quarter of these funds will remain in the top 25 % over the next five years--even worse than the result you would expect based purely on chance .”
Prof . John Cochrane , author : “ Past performance has almost no information about future performance .” S . T . Coleridge : “ History is a lantern over the stern . It shows where you ’ ve been but not where you ’ re going ”
Dow Jones Indices Report , June 2015 : “ The data shows a stronger likelihood for the best-performing funds to become the worst performing funds than vice versa .” -- June 2016 : “ Only 3.7 % of large-cap funds maintained top-half performance over five-consecutive 12-month periods .
Eugene Fama , Nobel Laureate : “ Our research on individual mutual funds says that it ’ s impossible to identify true winners on a reliable basis , even if one ignores the costs that active funds impose on investors .”