In a recent article, Dimensional Fund Advisors highlighted a couple of common investing mistakes. One of these is falling in love with popular stocks based on their recent performance or media attention.

Their research, however, shows that it is better to buy the Top 10 companies in the US before they reach the Top 10. On average, these companies outperform the market on the way up, but not in the years following their entry into the Top 10.

Past performance is no guarantee of future results.

This also tends to be true for investors who buy and sell their unit trust holdings based on recent out performance.

 

The above article was written and adapted by Marius Kilian.

 

Source: https://www.dimensional.com/us-en/insights/3-common-investing-mistakes