Schulfer & Associates, LLC

Past Performance is No Guarantee of Future Results

It’s the line we as advisors say all the time.  Yet, when I meet with clients at our firm who have been managing their own money, past performance is usually the number one metric that they tell me they’ve based their rationale for choosing their investments upon.  It goes something like this….  When it comes time to review the investments that I am in, I look over the performance numbers of the investments I have available (in my 401k, 403b, etc.) and find the ones that have done the best.  That’s where I shift my money – to the ones that have done the best.

That seems logical, right?  Pick the winners.  Depending on your timing, that might work.  If you get in when the investment is still on its winning streak and you get out before the tide turns, you’ve done well.  The million dollar question is though, how do you know when the tide is going to turn? 

To make my point, my favorite example that I share with my clients is that of bank CD’s.  If you purchased a five year bank CD in 2009, your rate would have been in the neighborhood of 3.332% (    Your rate of return would have been 3.332% each year for five years, for an average return of 3.332% per year.  If you only looked at your average five year rate of return and renewed your CD blind to the current interest rate expecting your same past performance, you would have a disappointing next five years.  Currently, five year CD rates are in the neighborhood of 1.69% (according to on 04/02/2014).   

My perspective:  I would not do my job without the help of a large and reputable research and due diligence team (we choose LPL Financial).  Research and ongoing monitoring is intended to optimize performance by taking into consideration things like the current economy, fundamentals of individual investments, movement of interest rates, technical market analysis, just to name a few.  The metrics that we monitor are ever changing and directly affect the ongoing performance of investments.  That’s why I have to tell you, Past performance is no guarantee of future results.  Investing involves risk including loss of principal.  No strategy assures success or protects against loss.


(Author’s note:  Due to industry regulations, I am prohibited from responding to any online comments. I welcome you to contact me via e-mail:

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Financial Professionals and can be reached at (715) 343-9600 or

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