One Step Forward, Two Steps Back
Vanguard has issued a new (short) report called Quantifying the impact of chasing fund performance. It delivers a familiar lesson: Don't sell low so as to buy high.
Many have told this story. Morningstar's Russ Kinnel, for example, has long published the "Buy the Unloved" funds series, which examines whether investors are skilled at moving between investment categories (nope). At the fund level, several companies have estimated the size of the gap that separates what funds earn on paper versus what funds earn for investors (who can and do erode paper returns through mistimed trades.)