Making Comparisons at The Wrong Time When markets are doing well, investors can forget the lessons of down-markets and unintentionally concentrate their risks. The success of an asset class, such as tech stocks or emerging markets, can make an investor with a balanced portfolio feel that they are missing out on the rally. Unfortunately, by selling their underperforming holdings to purchase the “hot” asset class, they may be selling low and buying high. The spectacular returns the investor wants have already taken place, and the investor could be buying right before the trend reverses. For instance, take a look at the average returns for emerging markets and fixed income in 2007: Source: Zephyr. EM Equity: MSCI EME. Fixed Income: Bloomberg U.S. Aggregate. An index is unmanaged, and you cannot directly invest in an index. Past performance is no guarantee of future results. A balanced investor could see this chart and conclude they should sell their fixed income holdings to purchase more emerging markets stock. After all, emerging market stocks returned more than 27% higher over the previous five years. Unfortunately, the investor who sells their