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Investing Specialists

In Defense of Your Laggard Holdings

Are your positions firing on all cylinders? Look out below.

Have both your stock and bond holdings been rocking the house, generating strong gains returns during the past three- and five-year periods? Do all of your holdings sport shiny top-decile performance rankings during those same time frames, too?

Some investors, even seasoned ones, might view those as positive indicators, an affirmation that they've built topnotch portfolios that will perform well in the future. But Morningstar research on the predictive ability of past returns (or lack thereof) suggest that they shouldn't take too much comfort from those numbers.

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