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History Is Bunk

Fund A grew 15 percent a year. Fund B grew 3 percent. Don't be a sucker and buy Fund A.

By |Posted Wednesday, Feb. 21, 2007, at 7:24 AM

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(Continued from Page 1)

The bottom line: Although common sense suggests that scrutinizing past performance should enable you to select funds that will perform well, it usually won't. There are some instances in which past performance is a good predictor of future performance: with index funds, for example, or in cases in which a fund's good results are due to low costs. In most cases, however, past performance is irrelevant.

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Henry Blodget is CEO of Silicon Alley Media, which publishes a network of business news and analysis sites including Silicon Alley Insider, Clusterstock, and The Business Sheet.