Hot Hands, Cold Hands: Does Past Performance Predict Future Returns?

Droms, William G.
May 2006
Journal of Financial Planning;May2006, Vol. 19 Issue 5, p60
Academic Journal
The article examines whether or not future performance in the financial market can be predicted by looking at past performance. Most individual investors spend a significant amount of time studying the past performance of the mutual funds they are considering for investment, even though this is not always a reliable indicator of the future performance of a mutual fund, though winners tend to remain the same for a small period of time, at the very least. The article presents an overview of major performance persistence studies published between 1990 and 2005.


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