The next is to examine the surviving qualifiers using more traditional criteria for final selection. If he is eating his own cooking, it's an important plus for obvious reasons. Since an above-average manager is such a rare commodity, odds are high that if he is only a hired gun, he is likely to be lured away to a competitor or start his own company. In the final selection process, most funds won't be a perfect fit to the top-25 profile and traditional analysis. The objective is to select those that come closest.
Most investors fail in their attempts to increase returns by timing their buys and sells.
The dollar inflows and outflows of stock and bond funds document the fact that the stomach usually wins and as a result, most folks get the buy-sell sequence backwards. Positive inflows didn't resume for almost two years - only after prices exceeded previous highs. This problem is not limited to funds - a study of 10,000 active stock traders by University of California, Davis professor, Terrance Odean, found that traders trailed the market by 7 percentage points. Numerous studies have shown that the average investor's returns are less than the very funds they invest in. Subtracting truly long term investors, those remaining trade at a furious pace.