The first principle of investing is that “past performance is not indicative of future results.” Yet, many in the investment industry and investor community rely heavily on the rear-view mirror. Product summaries boast returns for the past 1, 3, 5, and 10 years. Some investors buy currently hot stocks as they cull losers without much regard for their potential. Too often, it’s human nature for us to anchor on yesterday’s trend to extrapolate tomorrow’s outcome.
The most common misunderstanding about Crestmont Research is that its articles and charts follow that industry norm. But, Crestmont’s identification of secular stock market cycles is not based upon recent eras of strong or weak returns. Instead, Crestmont is keenly focused on the outlook for most investors’ horizons—periods of five to twenty years. Secular calls are driven by current conditions and outlook, not by past trends.
This two-page article describes the key principles underlying Crestmont’s research and related charts and writings. It closes with links to selected pieces that epitomize Crestmont’s work.