Investment Theories That Work . . .Occasionally by Jonathan Bergman, CFP®, EA Originally Published January 2002 Click here to print this article.

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Recently, many personal finance magazines came out with their "Best Funds for 2002" issues. These publications want you to believe that they can predict which mutual funds will be extraordinary this year. I doubt this is possible.

Investment publications and, for that matter, investment gurus love to make stock market predictions. It is, after all, exciting. It sells magazines and keeps investors coming back for more strategies that might outperform their neighbors'. Unfortunately, as I've learned through experience, accurate predictions generally reflect luck rather than skill.

Analyzing a chart I developed with the help of the Morningstar mutual funds database, I tried to identify a pattern in annual mutual fund category returns. Did 1995's winner repeat in 1996? Or did 1995's loser win big in 1996? Or perhaps the pattern of mutual fund performance is random?

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