I was watching this Vine video of a Virtual Reality (VR) rollercoaster experience complete with mechanical enhancements:

Maybe VR will revitalize the movie and themepark entertainment experience, rather than keep people in their own homes for VR entertainment?

The addition of physical movement would be hard to replicate at home, and some venue featuring these experiences would be great group entertainment.   As to how to invest for this, that remains a question.  Will theaters adopt this new business model, or will new disruptive companies rise to replace theaters (think back to how newspapers adapted to the internet, and blockbuster adapted to streaming).

So don’t necessarily think VR will kill the public entertainment industry – maybe we all won’t be holed up in our house with goggles on.   This may be a trend to keep an eye on.

I have always been diligent about looking at past performance of mutual funds prior to investing, and consider it to be one factor when comparing mutual funds.  However a recent improvement I made to  the VFS Daily Investment contest caused me to look at historical performance in a different light.

Starting in 2016, I am providing a prize for the portfolio with the best 3 year cumulative return.   The purpose was to reward ‘long-term’ excellence, and assumed the top portfolios would be pretty consistent.  However, I was surprised when I saw the results for 01/31/16 – the rankings for the top 10 portfolios changed dramatically:

So this caused me to immediately assume my calculations were messed up – so I did a little analysis of the top two portfolios:

And I found my explanation.  Using the approach of measuring return in terms of ‘$100 invested 3 years ago now is worth x’ does really magnify recent performance.  Note that even though Gregs portfolio was down 7.5% in January, it knocked $15 off his hypothetical investment.  So losses for the leaders are magnified as they hypothetically have more assets to lose.

The other important point is the starting point makes a big difference.  Greg’s portfolio for the period 2/1/13 – 01/31/16 got hurt, because he had a decent month in January (highlighted in green), which no longer counted. Removing the 4% gain from the first month knocked $10 off the 3 year return, further causing the large drop in Greg’s portfolio’s value.

So the moral to the story?  Be careful when looking at mutual fund past performance – as the time period you are looking at may make a big difference in how the performance is measured.  Or better yet – maybe mutual fund expense ratio is a much better indicator of future fund performance, since past performance is a pretty fluid measurement.