The Risks of Chasing Performance

What a Difference a Year Can Make

If you make investment decisions based on last year’s performance, you may be in for a surprise. Investments that perform well one year may not do as well the next. For example, consider the performance of emerging market stocks from 2007-2008. It was the best performing asset class in 2007, earning double-digit returns of 39.8%, but the very next year, its performance dropped to the bottom with returns of -53.2%.
 

Last year’s winner may be this year’s loser!

Note: Past performance is not a guarantee of future results. Emerging market stocks are represented by the MSCI Emerging Markets Index. Asset class rankings are based on 10 indices representing different asset classes from bonds to international stocks. Investments in non-US stocks are subject to additional risks including political and social instability, differing securities regulations and accounting standards and limited public information. Source: Callan Associates, 2017.

 

Avoid the Dangers of Chasing Performance by Developing a Long-Term Investment Plan

A personalized investment plan can help you make decisions based on strategy and research, not emotions or impulse. With a carefully thought-out plan, you may have a better chance of increasing returns and reducing the overall volatility in your portfolio.

To learn more about building an investment plan that can help you navigate the ups and downs of today’s markets, please talk to your financial advisor.