Not A Stock Wizard? Avoid These Investing Mistakes, Part 2

Read about the common mistakes people make when dealing with stocks.

Hot fund, cold fund, 1, 2, 3. If you're seeking a fewgood funds and have set your sights on a few of last year'shottest ones, look before you leap. In many cases, last year'stop performers will be funds of similar style and market sector,which means they'll probably all move in the samedirection--not bad if that direction continues to be up, but no funif things go the other way. That old saying, "Past performanceis no indication of future returns," is especially meaningfulhere, as the performance of investments over time shows aregression toward the mean. A hot fund could cool off just asyou're getting into it.

Instead, consider looking for fund managers with good long-termtrack records whose funds are out of favor and who aren'twinning any popularity contests. By selecting funds that are out ofsync with the current best and brightest, you'll have thechance to get in early on a trend.

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