The truth is, very few money managers, if any, can consistently beat the market.
Larry Swedroe, director of research at Buckingham Asset Management in St. Louis and author explains in the video below how…”Past performance has NO predictive value whatsoever,” Swedroe argues, jabbing at the SEC disclaimer that ”past performance is no indication of future results.”
Even though conventional wisdom compels people to put their investments with managers that have great track records, Swedroe says the problem is there is no way to differentiate between luck and skill, or to know why and when a certain manager will lose the magic touch. He says reams of data and studies suggest that stock picking is a very poor strategy for individuals and professionals alike.
“Yesterday’s masters of the universe are most often tomorrow’s cosmic dust,” Larry concludes.
Trying to pick winning fund managers and winning stocks is a fool’s game. Larry’s solution is the same as mine….own a passively managed diversified portfolio and (this is the hard part) have the discipline to stick to it. Check out this 5 minute video.
http://finance.yahoo.com/blogs/breakout/investing-stocks-better-good-lucky-164804602.html#more-10067
As a wealth strategist specializing in retirement planning and estate planning, this is one of the issues that hits close to home for many of our clients and friends here in central PA. They can not afford to have someone gambling and speculating with their life savings. Pay for coaching not for products.