The Lessons of Market History for Novice Investors
By John Coumarianos
Past performance is no guarantee of future results. Every mutual fund you own says something to that effect in its literature. And yet, ignoring the past--in investing or in any other field--is rarely a wise move. I don't mean you should be a performance-chasing hound. Buying funds that sport the gaudiest one- and three-year returns, for example, can easily lead you astray. However, knowing something about stock market history can help you set expectations for your investments. That can be extremely useful for novice investors who have little experience navigating the turbulence of the markets.
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