Myth: Past performance will indicate what to expect from future returns

EVER heard of the phrase “The trend is your friend”? Think of the Asian markets in the early 90s, the technology boom of the late 90s, BRICs in the mid-2000s and gold in the late 2000s. Now think about how most of them ended.

Investors very much want to invest with confidence. And, for many, that confidence comes from recent track records, canvassed in media headlines, angled in glowing terms by investment pundits who chase their meteoric anti-gravity price ascent to produce sensationalised sound bites in the era of compressed news cycles and easily distracted audiences.