Investment Fashion Victims and the Problems of Wrestling
Journal of Retirement Planning (10/00) Vol. 3, No. 5 p.39; Ralphs, Mark

Mark Ralphs says investors flirt with danger when they regard the hype spoken about top-performing funds. According to Ralphs, most investors are prone to the allure of trends. This usually occurs when a new investment "fashion" or hot sector is involved. And because these individuals tend not to be averse to risk, investors are often ensnared by unsubstantiated claims they see in advertisements. One hot sector investors have been flocking to is the dot.com sector. Ralphs says the backlash that came from high-tech funds serves as a classic example of why investors should never deviate from fundamental value principles. He notes that by Spring 2000, most high-tech funds were showing losses of at least 25 percent. Many of these claimed to be "stellar performers." In short, as a rule of thumb, investors should always question claims of top performance over a long period of time and be wary of funds that advertise top performance.


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