It's no wonder that Wayne Gretzky's comment about skating where the puck is going to go--rather than where it has been--has been repeated so often. Of course, history can be instructive. But whether you're playing sports, managing a business, or raising a teenager, anticipating what's next will usually hold you in good stead.
The same can be said of managing your investments. If you're rebalancing your portfolio or initiating new positions--funding your IRA, for example--it's wise to do so with a contrarian mindset. Last year's winners will rarely make for a good shopping list because their valuations are often inflated. Instead, when deploying new assets, you're usually better off looking to parts of the market that have underperformed and may be due to recover.
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Christine Benz has a position in the following securities mentioned above: NEWFX. Find out about Morningstar’s editorial policies.