Rotation in Action
Chart of the Week for December 15-21, 2000
Past performance is not a good indicator of future results. We’ve been hearing this adage for so long that we sometimes tend to dismiss it as being just another investment cliché— that is, until the market reminds us of the wisdom of the maxim.
Last year, as tech stocks skyrocketed, many investors were quick to transfer a substantial portion, or in some cases, all of their assets (invested in other, less rewarding sectors) into tech sectors. That decision appeared to be the right thing to do, as technology and equipment sectors rose 74.8% and 119.5%, respectively. So far this year however, communication equipment is down (47)%, and technology has fallen (30)%. In all cases, sectors with negative returns in 1999 have positive year-to-date 2000 returns.
Investors who ignore the wisdom of the above adage do so at their own peril, or to be more precise, at the risk of seeing their portfolios sharply devalued. Chasing returns under the diguise of being a momentum investor doesn’t work in the long run. Spreading your investments across many sectors is the best guarantee against market fluctuations.
This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.
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The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.