Past Investment Performance Matters…Does it Really?

05/27/24 • 10 min

Invested Poorly: Sad Tales of FInancial Fails

Even though everyone knows past performance is no guarantee of future results, the allure of buying what you wished you’d owned tempts us all. This episode will help drive this point home further with examples of why heeding this advice is so important to successful investing.
Jeff Harrell also shares what three types of investment returns most people typically want to achieve and how most investors hold completely unrealistic expectations. He exposes the types of shady tactics some investment firms might use to prey on investors who are enamored with performance in the recent past.
You’re likely to come away from this episode with a realization that the question, “How did that stock do last year?” probably isn’t as helpful as you thought it was.
(Season 1 Episode 6)

Podcast produced by Ted Cragg of QuickEditPodcasts.com
Music Credit: Dream Cave / Adventure Awaits / courtesy of www.epidemicsound.com

Podcast produced by Ted Cragg of QuickEditPodcasts.com
Music Credit: Dream Cave / Adventure Awaits / courtesy of www.epidemicsound.com

Previous Episode

My Investments Are Doing Awesome (Or Terrible)…How Do You Know?

Perception is often not reality. Everyday investors would do well to keep this in mind while reviewing their investment accounts. Unfortunately, many investors’ lack of understanding about performance has cost them dearly over the years.
Gaining a better understanding of this will better equip you to compare your results to relevant benchmarks, thereby improving your ability to evaluate your returns.
With a short math lesson, Jeff Harrell teaches you how to calculate investment performance. Tune in to this mini masterclass to get a better grasp on the differences between a personal rate of return and a time-weighted rate of return.
(Season 1 Episode 5)

Podcast produced by Ted Cragg of QuickEditPodcasts.com
Music Credit: Dream Cave / Adventure Awaits / courtesy of www.epidemicsound.com

Next Episode

I’ll Wait to Invest When the Stock Market Pulls Back…Why?

Timing the stock market is something we’re all told not to do, yet all of us are guilty of it at some point. This episode may have the “smoking gun” illustration to help you avoid this poor decision going forward.
Jeff Harrell explains two hypothetical (and impossible) scenarios of the luckiest and unluckiest investors in history—the former buying into the stock market at the very bottom every year and the latter buying in at the very top. How wide do you think the gap is between their portfolio values after a 35-year time horizon?
He adds a third (and more realistic) scenario of an investor dollar cost averaging into the market monthly, instead of annually, and compares their portfolio to those of the world’s luckiest and unluckiest investors.
Don’t answer the following question until you’ve heard this episode: “Is now a good time to invest in the stock market?”
(Season 1 Episode 7)
Resource Mentioned in Episode:

Data illustration of hypothetical stock market timing scenarios - see episode Show Notes on our website

Other Episodes Referenced:

Podcast produced by Ted Cragg of QuickEditPodcasts.com
Music Credit: Dream Cave / Adventure Awaits / courtesy of www.epidemicsound.com

Invested Poorly: Sad Tales of FInancial Fails - Past Investment Performance Matters…Does it Really?

Transcript

One of, if not the, most common disclosures you see when it comes to investing is “past performance is no guarantee of future results.” This is the first thing every compliance officer slaps on a marketing piece that shows historical investment performance. However, when I was working as a financial advisor, meeting with prospective clients, it was almost always one of the first questions someone would ask when we started discussing the specific investments we were recommending.
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