monroemar (96.23)

monroemar's CAPS Blog

The best indicator of Future performance is Past performance

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April 23, 2008 – Comments (3) | RELATED TICKERS: AGN , BIO , WHG

While I do understand I'm quite the novice when it comes to investing. I do have a bit of experience in life. When working as a hiring manager for a large non-profit organization, a mentor gave me the advice that the best indicator of future performance in past perfomance. And that just because i liked someone or didn't like that person didn't mean that they were or weren't the right person for the job. So just because a stock is shiny and new, and exciting doesn't mean it will be a blockbuster.

So i was very happy when The Fool made it possible to graph the stock price of a company up to 10 years. When looking of the long term. Well run companies have a steady increase in share value. And blips in price are just that, an oppurtunity to buy at a discount price.

3 Comments – Post Your Own

#1) On April 23, 2008 at 4:50 PM, Tastylunch (30.04) wrote:

Reminds me of the old standard disclaimer

"Past performance is no indication of future performance."

I agree it's good to know about past performance, but I don't think it's the best indicator in isolation of future results by any means. I don't think past performance would have tipped you off about Bear Stearns or National City by looking merely at their charts or earnings before their massive declines. Well run companies of yesterday could very be easily be poorly run tomorrow., take Yahoo for instance. Conversely you might miss turnaround stories too, if you only look at the companies past results. Take Sears for example a few years back.

Critical thinking and due diligence about a business'es health and sales climate trump past performance in my mind. The past is the past, as investor I care about the future. Past performance is indeed important to take into consideration as part of your due diligence but the disclaimer exists for a reason.

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#2) On April 23, 2008 at 7:41 PM, Atleus (50.37) wrote: