May 2015

Past Performance, Bigfoot, Broccoli and Future Performance

Posted May 28, 2015  |  By Eric S. Holt, CFA

These things have nothing to do with each other. At the bottom of virtually every piece of marketing in the investments industry, you will see the following:

“Past performance does not guarantee future results.”

The Securities and Exchange Commission mandates that this disclaimer be put on all advertising and marketing materials. We want to believe past performance is an indicator of future results; after all, a person’s track record in business/sports/music/art gives us a pretty good idea of how they are going to do in the future. Unfortunately, in the portfolio management world, the past tells us very little about the future.  Consider the following from “The Persistence Scorecard” (“Does Past Performance Matter: The Persistence Scorecard”, December 2014):

Economic Reviews

Posted May 19, 2015  |  By Eric Holt

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