What Is Rear View Mirror Investing In Stock Markets?

Now when the markets have made an all time high, investors need to adopt a cautious stand as it is typical of these markets to perform in a cyclical fashion and any undue risk taken can prove really hard upon you. So, just by being lured by near term huge gains, you need not take a position in a particular stock or mutual fund scheme.

What Is Rear View Mirror Investing In Stock Markets?

Also, as the disclaimer points out "Past performance is not indicative of future returns" ,but investors sometime in a haste and being lured by huge outperformance in the market just factor in the immediate past. This is what is rear view mirror investing which makes investor's investment behavior to be in line with the markets say when the markets are reaching new highs; investor too becomes bullish and the same stands true in the other scenario.

What should be your approach in such euphoric market runs?

A real investor who is patient with his investments on the other hand should not fall prey to such times and instead cash on opportunities during times when the market is underperforming as the earnings through the approach are likely to be bountiful in the near future. Better it would be to adopt a reverse rear view investing model which says worse the performance in the immediate past better are the chances to earn great rewards.

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