how to PLAY it

found a hotshot fund manager? Take such flings with no more than 10% of your retirement money. There are three reasons to curb your enthusiasm.

one is that active management is expensive. The next is that past performance is an extremely feeble indicator of future performance. You can see that in a recent report card by morningstar on its own rating system. as carefully crafted as that system is, it doesn’t make you rich. subsequent five-year returns for top-rated stock funds were scarcely better than average returns of their peers.

The third reason to be modest in your quest for market-beating results has to do with the failings not of stock pickers but of their customers. investors have a bad habit of getting in after a winning streak and departing after a down stretch. That is, they buy high and sell low. The Columbia Global Technology Growth fund is well-run, garnering four out of five stars from morningstar. over the past decade, it has earned 10.7% a year. its investors have averaged a return exactly half that.

William Baldwin is forbes’ investment strategies columnist.