I often get asked: “Have you seen the performance of ABC money management fund?!! Should I jump on the bandwagon?”
I’ve been managing money for over 20 years. Here’s the advice I give.
Be careful with any funds that grow too big, too fast. Often, they can’t sustain their performance.
There was a very popular mutual fund in the late 90’s invested in this technology called the internet that was growing leaps and bounds. You know, one day you’ll be able to have high speed wireless internet and you have to be invested in the companies that are benefiting from this. This fund did huge returns. The manager would tour around to different offices and everyone had to get their Polaroid with this guy. I think one year it was up 260% only to have it come crashing down in the “dot com” collapse. Fast forward 20 years, and it’s happening again.
Be very careful with what you buy and always be aware of risk. In the case of the technology mutual fund mentioned above, people who held on are still waiting to get back even 20 years later.