If You Cling to the Past, It'll Cost You
Don't live in the past.
As many investors have discovered to their dismay, past performance is a rotten guide to the future. Just when we think we've found a top-flight mutual-fund manager, the manager's hot hand suddenly turns cold. Just when we think a market couldn't possibly fall any further, it promptly plunges another 20%.
Faced with such harsh lessons, many investors profess to ignore recent results. But in fact, these results tend to influence even the most sophisticated investors, argues Mark Riepe in the November 2003 Journal of Financial Planning.
"People say they don't pay attention to past performance," says Mr. Riepe, head of investment research at San Francisco's Charles Schwab Corp. "But I bet they do. They just haven't figured out how it influences them."
Battling Demons
So how does past performance affect your investing? Consider investors' reaction to this year's boisterous stock-market rally. Many folks find themselves battling two competing impulses.
On the one hand, we are inclined to believe "the trend is our friend." As the market rises, we extrapolate these gains, convincing ourselves that stocks have further to run.
On the other hand, we fret that "what goes up must come down." After the brutal bear market, many investors are anxious to "get even, then get out," cashing in some of their gains before their portfolio's profits once again slip away.
These dueling impulses also affect our view of individual investments. As trend followers, we are drawn to skyrocketing stocks and highflying funds.
But projecting past performance is a dangerous game. If investors aren't careful, they will always be late to the party, buying after an investment has posted dazzling gains and just ahead of the collapse.
Even if we don't chase hot stocks and funds, we may find good performance lulls us into complacency. Suppose you own a fund that posts sparkling short-term gains. The temptation is to smile at your good fortune and enjoy the ride.
But maybe the highflying fund is lagging behind others that invest in the same sector, and thus maybe it really isn't a star performer. Alternatively, maybe the recent performance is a sign the fund has taken on a lot more risk, and maybe that risk will come back to haunt investors.
Rather than being comforted by an investment's heady gain, some folks find it unnerving. Anxious to avoid big losses, we might shy away from top performers and instead favor the downtrodden.
Bucking the crowd certainly seems like a more sophisticated strategy. But in the end, it may prove no more profitable than chasing fads.
Digging for Value
There is, in theory, a simple way to fend off this maelstrom of emotions. Instead of fixating on past performance, we could take each investment and ask, "what is it worth?" After doubling in price, a stock may be absurdly expensive -- or it may still be a decent value. If we can gauge the stock's underlying value, we should have our answer.
Problem is, these sorts of judgments aren't easy. For proof, look no further than March 2000. Today, everybody agrees there was a stock-market bubble. But at the time, stock-fund managers, market strategists and stock analysts were almost uniformly bullish. Clearly, figuring out what's over- and undervalued is no slam dunk.
That doesn't mean investors should ignore market valuations. I believe every investor ought to take a stab at forecasting likely long-run returns.
In the case of bonds, I would focus on current interest rates. Today's 5% yield on high-quality bonds is, I suspect, a pretty good indicator of bond-market returns for the decade ahead.
Similarly, investors can estimate stock returns by combining today's 1.6% dividend yield with some estimate of earnings per share growth. Suppose you assume that earnings will match their historical average, climbing two percentage points a year faster than inflation. Figure in 3% inflation and stocks might clock 6.6% a year, on average, over the decade ahead.
By making such forecasts, we drag our gaze away from the past and force ourselves to consider how much our portfolio might realistically earn. But, unfortunately, such forecasts are nothing more than rough estimates. They certainly don't tell us whether the trend is our friend or whether what went up is about to come crashing down.
Taking Aim
If we shouldn't read too much into past performance and we can't figure out how much an investment is really worth, what should we do? I find myself falling back on one of my favorite investment strategies, which is to set target percentages for various portfolio holdings and then stick with them.
Let's say you divvy up your portfolio so you have 30% large-company U.S. stocks, 10% smaller companies, 5% real-estate investment trusts, 10% developed foreign-stock markets, 5% emerging-market stocks, 30% high-quality bonds and 10% high-yield junk bonds.
Once you have established these targets, you should rebalance every year, lightening up on sectors that have fared well and bolstering those that have lagged behind. For instance, if your high-quality bonds fall below your 30% target, you should add to those holdings, boosting your bonds back up to 30%.
This rebalancing controls your portfolio's risk level and it may boost returns. But it also has some pleasant side effects. By sticking with your portfolio targets, you stop yourself from overreacting to past performance, whether your inclination is to chase trends or dump hot sectors. This strategy also relieves you of the need to figure out whether a sector is over- or undervalued.
To be sure, setting targets and then regularly rebalancing seems a tad mindless and mechanical.
But is that so bad? Faced with our emotional reaction to the past and our ignorance of the future, being mindless and mechanical could turn out to be pretty darn smart.
莫被历史行情蒙蔽双眼
不要总是向后看。
许多投资者沮丧地发现，市场过去的表现对于未来是个蹩脚的向导。正当我们自认为发现了高明的共同基金经理时，他的好运气忽然变坏了。当我们猜想市场不会进一步滑坡时，却又下挫了20%。
面对这样严酷的教训，许多投资者声称要对近期的市场趋势不予理睬。但马克?瑞培(Mark Riepe)在2003年11月的《财务计划期刊》(Journal of Financial Planning)中声称，实际上，这些趋势甚至可能影响最成熟的投资者。
瑞培是位于旧金山的嘉信理财公司(Charles Schwab Corp.)投资研究负责人，他称：“人们说不关心过去的市场趋势，但我敢打保票他们关心，他们只是没有意识到趋势对他们造成的影响。”
两类冲动
那么，以往的行情是如何影响你投资的呢？想想投资者对今年股市疯涨的反应。许多人发现，自己要与两种内心冲动作斗争。
一方面，我们倾向于相信“趋势是我们的朋友”。随著市场的走高，我们根据涨势推断股市还有继续上行的空间。
另一方面，我们担心“有涨必有跌”。在严酷无情的熊市过后，许多投资者热切希望“收回老本，撤出市场”，即先落袋为安，以预防投资组合再次缩水情形的发生。
这种矛盾的心理也影响著我们对散户投资的看法。作为市场趋势的追随者，我们被直线上涨的股票和快速攀升的基金所吸引。
然而，依据以往趋势推断是个危险的游戏。投资者一不小心就会在涨幅炫目而滑坡在即的时候买入，成为股票最后的接手人。
即使我们不追随热门股和热门基金，也可能因市场状况良好而自鸣得意。设想你持有的基金短期内出现了耀眼的涨幅，你也许会开始躺在好运气上睡大觉。
但是，也许这个飞涨的基金表现落后于其他投资相同领域的基金，并非基金中真正的佼佼者。另外一种可能是，最近的趋势预示该基金风险增加，而且这种风险可能再度将投资者打入地狱。
一些投资者对投资组合的快速升值不仅不会感到快慰，反而忐忑不安。由于担心遭受重大损失，我们可能会避开表现最好的股票，而偏爱那些奄奄一息的股票。
看起来，反其道而行之显得颇为老练。但最终，这种做法可能并不比随大流赚更多的钱。
挖掘价值
从理论上讲，有一种简单的方法可以避免上述的思想斗争。我们不要把目光集中在以往的行情上，而是针对每一项目投资都发问：“它值多少钱？”在股价翻倍后，其价格可能高得离谱－－也可能仍在合理范围内。如果我们能估测出股票的潜在价值，就找到答案了。
问题是，作出这样的判断并不容易。对于这一点，只要回顾一下2000年3月的情形就清楚了。如今，人们一致认为那时出现的是股市泡沫。但在当时，股票基金经理、市场分析师和股票分析师众口一词，宣称市场看涨。显然，判断价值被高估还是被低估绝非易事。
但这并不意味著投资者应对市场价值置若罔闻。我相信，每个投资者都应该试著预测一下长期收益率。
如果是债券，我就会把注意力集中于当前利率。我猜想，当前优质债券5%的收益率是未来十年债市收益率的相当好的指针。
同样，投资者可以将如今1.6%的股息收益率和每股收益增长预期结合起来，对股票回报进行估测。假定每股收益增幅与它们的历史平均数据趋势相符，即每年比通货膨胀率高出2个百分点，将3%的通货膨胀率计算在内，我们可得出今后十年股票的年收益率为6.6%。
通过这样的预期，我们将紧盯过去的视线拉了回来，强迫自己考虑投资组合能带来多少实际收益。但不幸的是，这样的预期只不过是粗略的估计，当然也无法告诉我们趋势是否是我们的朋友，以及那些上涨的股票是否即将回落。
设定目标
如果我们不对过去的股票表现加以探究，无法把握投资的真实价值，该怎么办呢？我发现，我又回到了自己最喜爱的投资策略之一上，这就是设定投资组合中各种投资品种的比例，然后坚持到底。
假设你对投资组合作如下分配：30%为美国大公司股票，10%规模较小公司的股票，5%房地产投资，10%外国股票，5%新兴市场股票，30%优质债券，10%高收益率垃圾债券。
一旦设定了这些目标，你每年就要进行调整，减持表现好的股票而增持表现差的股票。比如，假若你的优质债券比例低于你设定的30%的目标，就该增持这些债券，使之恢复到30%。
这种调整既控制了你投资组合的风险，又可能提高了回报率。同时，它还产生了一些让你高兴的“副作用”。由于恪守投资组合目标，你不再对过去的市场表现作出过度反应，无论你是倾向于追随市场趋势还是反其道而行之。这一策略还让你从判断类股价值被高估还是低估的难题中解放出来。
诚然，设定目标之后经常调整的方法看起来有些没头脑，过于机械。
但这种方法真的很糟吗？相比较我们对历史行情做出的情绪化的反应和对未来的茫然无知，机械和没头脑可能最终被证实是相当睿智的策略。
