Chasing past performance is a logical fallacy and can lead to trouble.
For a mutual fund, it’s far better to compare its performance to the market as a whole. While “only” losing 8% when the market is down 10% isn’t exactly exciting, consistently outperforming the market (and not just over say, 6 months) is a good indicator that smart people are managing the fund. Funds with rookie managers and not much history are risky.
If your portfolio is diverse already with a mix of stocks and bonds you shouldn’t have to shift as the wind blows. If you’re making deposits monthly, in a down market you should be buying relatively cheap.
There’s nothing wrong with shifting out of an underperforming fund. And there is a time and place for rebalancing a portfolio. If you were 100% stocks before, now is a great time to fix the fact you were out of balance.
It depends a lot on how much time you want to spend managing your money. For the average person, buying and holding a good fund is the way to go. There are ways to do better, but for most, the time and effort aren’t worth the yields.
