Perils of Investing Based on Past Performance

Eagle Wealth Management |


Investing based on past performance is like driving while looking in the rear-view mirror.
It.  Will.  Cause.  Accidents.

We’ve all heard the disclaimer repeated on every single investment advertisement: “Past performance is no indication of future results.”

We hear it often enough.

We might even believe it.

But then… what's the first thing we do when we have a pool of money to invest?

In fact, what feels like the first right thing to do?

No prizes for guessing right because you know the answer… The first thing we do when we have money to invest is look for the investment that has recently done well.  We look at the track record.

It feels like that makes sense.  If you’re going to hire a contractor to remodel your kitchen, it would be reasonable to go look at the work they’ve done in the past and to expect that quality of work to continue, if not improve.

But when it comes to investing, this doesn’t hold up.  Because investments often go in cycles, looking at how things have done in the recent past leads us to buy high, which inevitably leads us to be disappointed, and then we sell low, only to repeat the process over and over and over.

Investing in the rear-view mirror doesn’t make sense.

Turns out, investing based on what you think is going to happen in the future doesn’t make sense either.

The only thing that makes sense is to invest based on our own goals and values.

So, forget looking in the rear-view mirror.  Forget predicting the future.  Instead, consider spending the time to get clear about where you want to go and what the money is for.  After all, that’s why we work together to build a financial plan tailored to where you’re headed, not where you’ve been.  

Your Eagle Wealth Team


Thank you all who attended our shred event earlier this month!  We really enjoyed catching up with you in person. While the weather report called for rain, we lucked out and enjoyed some sunshine just before the storm rolled in. Our friends from Board in Bend outdid themselves and built a beautiful charcuterie spread along with some delicious soup to warm us up.  We’re so grateful for these small moments to hear about what’s happening in your life.  We look forward to seeing you again soon.


The Week on Wall Street

Stocks posted solid gains for the week, buoyed by the release of Fed meeting minutes and upbeat earnings from mid-size and discount retailers.

The Dow Jones Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%. The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.09%.1,2,3

A Good Week

The stock market staged a broad rally last week, ignited by the release of minutes from the May’s Federal Open Market Committee (FOMC) meeting. The meeting notes eased concerns that the Fed might pursue a more aggressive monetary tightening stance than the Street had anticipated.

Investor sentiment rose owing to solid earnings and encouraging guidance from several mid-size and discount retailers, which eased concerns about the health of the American consumer. A smaller rise in the personal consumption expenditures price index, the Fed’s preferred measure of inflation, triggered a strong rally on Friday. The powerful move ended seven straight weeks of stock losses.4

Fed Minutes

The minutes from May’s FOMC meeting were released last week. They confirmed the likelihood of at least two successive 50 basis point interest rate hikes. The minutes also indicated they might need to raise rates to a level that acts to restrict economic growth, something that Fed Chair Jerome Powell acknowledged might be a painful process.5

Not all Fed members are fully committed to the more aggressive rate hikes. Last week, Atlanta Fed president Raphael Bostic wrote that a pause in rate increases in September might be appropriate. He joined other members in suggesting that economic conditions may warrant reconsideration of additional rate hikes beyond those already signaled by Powell.6




Tuesday: Consumer Confidence.
Wednesday: Institute for Supply Management (ISM) Manufacturing Index. Jobs Openings and Labor Turnover Survey (JOLTS).
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Factory Orders.

Friday: Employment Situation. Institute for Supply Management (ISM) Services Index. 

Source: Econoday, May 27, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.



Tuesday: Salesforce, Inc. (CRM), HP, Inc. (HPQ).
Wednesday: MongoDB, Inc. (MDB).
Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL), DocuSign (DOCU), CrowdStrike (CRWD).

Source: Zacks, May 27, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.