Keep your eyes on the road. That’s what we all heard in driver’s ed, but as any experienced driver knows, you need to check your rear-view mirror to see what’s going on behind you. However, the driver who insists on trying to drive while ONLY looking in the rear-view mirror is an accident waiting to happen. The same rule applies for investing. At the New York Times, I discuss what happens when past performance becomes the driving factor for investing decisions. Past investment performance has little predictive value on what will happen in the future, yet we rely on it time and again to make our investing decisions.
The Temptation (and Danger) of Past Investment Performance (New York Times)
