Why aren’t past returns a reliable indicator of future returns?

The investment strategies optimized and recommended by True Wealth are broadly diversified and encompass various asset classes, including stocks, bonds, real estate, cash, and commodities.

We therefore do not focus solely on those asset classes or regions that have outperformed others in recent years. It would be easy to construct a portfolio consisting solely of past winners. This would be tempting from a superficial perspective, as such a strategy would historically have yielded better returns than a diversified, forward-looking portfolio.

Historically, however, the winners of the past are often the losers of the future – and vice versa. The explanation lies in the fact that liquid capital markets are almost always highly efficient, and the price of securities reflects all publicly available information – including a look in the rearview mirror. That is why our True Wealth-optimized investment strategies are focused on the future.