What’s happened to funds that soared high in 2000?
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The best way to bring yourself to your senses when you eye a new fund that has shot up, is to look into the past, and see what has happend to all those great investments that posted returns of over 100% in a year.
Photo Credit: Fristle
An article in the Wall Street Journal, takes a look at 275 such funds in that year, and has analysed what their status is now using Morningst Inc. Fund Tracker.
Of these 275 funds, 97 of them no longer exist! Due to a variety of reasons including being merged with other funds, liquidation, or simply dropping out of the database, these funds are just not on the market anymore.
Out of 179 survivors, if you had invested in a third of them, you would have had double digit negative returns by now! Only 37 of them topped the market average by very slim margins.
It turns out that this is the ultimate lesson. Past performance does not in fact, guarantee future performance. Like I said in the beginning of this article, this little piece of news should make investors come to their senses.
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