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performance the following year. In the years 2008 and 2009, none of them repeated their previous year’s top 100 performance. Variations in manager performance are a function of luck and the random rotation of the style of their fund. When a particular manager’s investment style is rewarded by the market, that manager is often credited with skill. As market conditions change, however, so does the performance of fund managers. Figures 5-2 and 5-3 track the rankings of the top 10 mutual fund managers in a given year and subsequent time periods. These charts reveal how quickly a “top” fund manager can slide to the bottom. For example, Figure 5-3 shows that Dynamic Gold & Precious Metals I had the highest performance out of 6,446 mutual funds in 2010. In 2011, however, the fund slipped to 6,389th place, landed in 6,648th place in 2012, and ominously, no data is available for 2013. The data contained in these two figures reveal many other examples of fund performance that sharply declined. Top-performing funds have failed to maintain their position throughout a meaningful subsequent period. As Bob Dylan said, “the first ones now will later be last, for the times they are a changin.”71 An analysis of the Morningstar database of 231 mutual funds with 10 years of returns is shown in Figure 5-4. The top graph shows the performance rankings of these 231 funds from best to worst (left to right) for the first 5-year period from 2004 to 2008. Then the same order of fund rankings is maintained in the bottom graph in order to see if fund performance was repeated in the years 2009 to 2013. Based on the above studies,

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