One of the deadly sins of investing is chasing performance. Investors piled into technology funds just as the tech bubble was bursting. A column in today’s Report on Business points out that mutual fund investors tend to make precisely the wrong investment at the wrong time. Currently, the best-selling mutual funds are all income-oriented, while US and international equity funds are experiencing massive redemptions. The column points out that Enbridge (TSX: ENB), an utility, is selling for 21 times earnings, while such names as Cisco (CSCO), Pepsi (PEP), Colgate-Palmolive (CL) and Wal-Mart (WMT) are selling for less. Almost everyone is now chasing yield.
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2 responses so far ↓
1 Anonymous // Jul 26, 2005 at 5:43 pm
According to Roger Ibbotson, mutual fund winners do tend to outperform the following year, see his 2002 papers, et al.
2 Arbee // Jul 26, 2005 at 10:28 pm
Anon: Can you provide me with a link to the research, if it is available online? Thanks.
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