Investment graphics don't always mean what they seem.
Today's column follows up on Wednesday's topic of the persistence of mutual fund performance. In that article, I responded to a columnist (Dan Solin) who argued that backward-looking risk-return measures are not predictive. Solin's support material, courtesy of DFA, is shown below.
I'd write that alarm bells should be ringing in your head, but I've shown this material to several experienced and insightful people, and alarm bells were generally not ringing in their heads. So, I will reword. It would be nice if alarm bells were ringing. If not, perhaps they will in the future after you read this column.