Chart of the Day: Beware of Chasing Performance

Today’s Chart of the Day is from a Financial Times article called “Past Performance is a Public Enemy” and includes a chart provided by Schroders. It shows that the returns of top ten performing stocks in the following year, and all the years after, were negative.

The article goes on to say that in 13 of the past 18 years, not a single US stock that was a top ten performer in one year also made the top ten in the next. This reinforces that companies who win in the long run are often not the ones that are the best performers in any one year but are the ones that can grow sustainably in the long run. Trade wisely and know the odds are in favor of the “sell high” side of the old adage, “buy low, sell high.”