At the end of the day, hardly any investors delve into anything beyond what amounts to pretty cursory research—although they may have thought they were thinking in depth. The most common approach to investing in stocks, bonds, real estate or mutual funds is this: If an investment has done well in the past, it will probably do well in the future. This is essentially momentum investing. It may work well. At least until it doesn’t. And when it doesn’t, things can get ugly fast. Stocks, for example, don’t perform well simply because they performed well in the past. Rather, they perform well because their companies’ technology, operations or marketing perform well. Importantly, … American capitalism is so competitive and dynamic that it’s a very rare company that can produce leading results over the long term. We feel it is much better to carefully evaluate companies’ ever-changing competitive positions than to consciously or subconsciously extrapolate prior results.