In high-flying markets, the forgotten investors may be the wisest of all

The newsletter of outspoken former kind of bonds Bill Gross makes for interesting reading.Patrick T. Fallon/Bloomberg

I was reading the Chou Funds annual report this week. Francis Chou is someone I know and have followed for many years. He’s got a great long-term record, although it’s taken a hit recently. As a result, he’s not topping the charts right now and you don’t hear much about him.

I mention Francis because it illustrates a behavioural tendency we all have — we like to follow people who are doing well. The quarterback who’s winning. The actress who is getting the nominations. And the analysts, portfolio managers and strategists who are perceived to have been correct in recent years and/or whose returns are first quartile.

But what about the previously brilliant? The people who were topping the charts a few years ago. Are they suddenly less intelligent because they’re going through a rough patch? Is their analysis any less thorough?

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