Buy high and sell low -- It's not a typo.

Millions of investors guarantee their failure by selecting mutual funds and stocks based on quarterly or annual performance records. Do you chase performance? You might be buying high and selling low!

As the year draws to a close, millions of mutual fund investors begin an annual event to divine next year's winners. Yet most of these individuals rely heavily on a time-honored - but terribly wrong - method of evaluating strength. Whether analyzing screening tools from websites, reviewing fund honor rolls in magazines, or using star ratings from fund analysts, normally savvy business people foolishly chase the returns of last year's hottest investments.

This begs the question: Can top performing mutual funds lead two years in a row? Consider a study commissioned by Vanguard Investments Australia and released by Morningstar. The five best performing funds were analyzed from 1994 to 2003. Here are the results:

-- Only 16% of top five funds make it to the following year's list.

-- Top five funds average 15% lower returns the following year.

-- Top five funds barely beat (by 0.3%) the market the following year.

-- 21% of all top five funds ceased to exist within the following 10 years.

Academic studies and market statistics confirm the typical investor acts in direct opposition to the sage advice - buy low, sell high. It's only after high returns are realiz