Are Morningstar Stars Predictive?

600px-GlobularClusterM12In a word, no. Rather than rehash the reasons in blog text, please read the embedded for all the reasons why they are not predictive and why people still seem to crave them.

For a more pragmatic approach to the markets, the videos by Sensible Investing TV on YouTube are likely a better use of your time rather than pouring over noisy statistics that overlook what you are really trying to do with your money … reach your goals and aspirations.

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3 Responses to Are Morningstar Stars Predictive?

  1. Larry Frank, Sr. March 4, 2014 at 9:32 am #

    If you click on the Topics link “Passive or Index Investing” you’ll see that is the school of thought I operate under. Here’s an article in The Economist that succinctly states why: http://www.economist.com/news/finance-and-economics/21596965-costs-actively-managed-funds-are-higher-most-investors-realise-against?mkt_tok=3RkMMJWWfF9wsRonv67AZKXonjHpfsX56%2BwuUaa0lMI%2F0ER3fOvrPUfGjI4AT8VrI%2BSLDwEYGJlv6SgFSbDGMal52bgPWBQ%3D

  2. Larry Frank, Sr. October 3, 2014 at 2:39 am #

    Morningstar’s “new” rating system also is NOT predictive (nor surprise – since nobody can predict the future)

    http://advisorinsightsblog.com/2014/10/01/can-the-new-morningstar-analyst-rating-predict-performance/

  3. Larry Frank, Sr. October 27, 2017 at 1:34 pm #

    WSJ article The Morningstar Mirage
    Investors everywhere think a 5-star rating from Morningstar means a mutual fund will be a top performer—it doesn’t

    https://www.wsj.com/articles/the-morningstar-mirage-1508946687

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