On the folly of following hot sectors

Personal finance, Value investing

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A picture is worth a thousand words, and here’s one that really drives its point home. It shows how the % returns of the different for the last 14 years have been unpredictable and how the top and bottom performers for one year seldom repeat in the following year.

So keep this in mind the next time you hear an “expert” rave about next quarter or year’s hot sector to invest in. Remember how many of them also predicted last year would be the year large caps would finally outperform small caps? (Click image below for full size.)

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