Historical performance may indicate future success from "summary" of Security Analysis: Fifth Edition by Benjamin Graham,Sidney Cottle,David Le Fevre Dodd,Roger F. Murray,Frank E. Block,Martin L. Leibowitz
As investment analysts, our primary task is to evaluate securities based on their potential for future success. While it is true that historical performance can provide valuable insights into the future prospects of a security, it is important to approach this concept with caution. When we consider the historical performance of a security, we must take into account the prevailing market conditions at the time. Just because a security has performed well in the past does not guarantee that it will continue to do so in the future. Market conditions are constantly changing, and what may have worked in the past may not necessarily work in the future. It is also important to consider the specific factors that contributed to a security's past performance. Did the security benefit from a particular trend or event that is unlikely to be repeated in the future? Was its success due to the skill of the management team or simply a stroke of luck? These are important questions to ask when evaluating historical performance. Furthermore, we must be wary of falling into the trap of extrapolating past performance into the future. Just because a security has performed well in the past does not mean that it will continue to do so. We must always exercise caution and conduct a thorough analysis of the security's fundamentals before making any investment decisions.- While historical performance can provide valuable insights into the future prospects of a security, it is important to approach this concept with caution. Market conditions are constantly changing, and what may have worked in the past may not necessarily work in the future. We must always conduct a thorough analysis of a security's fundamentals before making any investment decisions.
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