It's hard to do, but sometimes investors have to admit they're wrong and move on

Martin Pelletier: Humility is the ultimate form of risk management

This isn’t something that happens overnight, but slowly over time. Industry changes and competitive threats, such as the shift to goals-based investing, portfolio diversification and low fees, are ignored simply because one has a top-quartile track record of beating some pre-selected benchmark or index over the past decade.Article content

There is a reason why assets under management have a strong correlation to one’s performance: fund managers sell themselves on it and investors buy based on it despite the old warning that past performance does not indicate future performance. It isn’t always that easy though. History has shown that when things go wrong in this segment of the market, they can go terribly wrong, with losses as much as 67 per cent in one year, and a whopping 81 per cent drop from April 2000 to September 2002.

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