The Perils of Investing Based on Past Performance of Stocks

April 22, 2015 6:32 PM

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The Perils of Investing Based on Past Performance of Stocks

The overwhelming majority of individual investors approach the stock market with a mentality that virtually guarantees failure: They believe that the future will always resemble the present.

Even though most investors know that what goes up must eventually come down, they irrationally persist in buying stocks that are highly priced. The amazing thing is that, even though many of these people are long-term investors, they ignore stocks’ long-term past performance. A stellar few months co...

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