On the campaign trail, presumptive Republican presidential nominee Donald Trump has said, "we will have so much winning if I get elected, that you may get bored with winning."
Winning with investment portfolios never gets boring.
However, wanting to be associated with winners leads many individual investors to systematically underperform the overall stock market. Investors are often drawn to stocks or mutual funds that have outperformed in the recent past and expect that superior performance will continue into the foreseeable future. Behavioral economists call this hindsight bias -- the expectation that the recent past is the best gauge of the near future.
You may want to look for investment opportunities in stocks that have underperformed in the recent past. In 1985, professors Werner DeBondt and Richard Thaler published research showing that stocks that performed the worst over the past several years outperformed the stocks that had performed the best by a wide margin over the next several years. They attributed these findings to the belief that investors consistently overreact to both good news and bad news. Good news drives stock valuations too high relative to fundamental metrics, and bad news drives stocks too low.
Professors Luis Garcia-Feijoo of Florida Atlantic University and Gerald Jensen of Creighton University and I ran some numbers and confirmed that over a 48-year period from 1966 through 2013, the bottom 20% of stocks as ranked on previous five-year performance (the losers) outperformed the top 20% of stocks ranked on previous five-year performance (the winners) by an annualized 5% margin. We ran the simulation on a monthly basis for the 48-year period and averaged the results. In other words, the meek stock market performers consistently inherit the investment earth.