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Past performance is no guaranteeAsset classes show year-to-year variationsBy Bina Brown  Bullish Luck again won the Champions Mile in Hong Kong in 2006. But who will win in 2007? SUCCESSFUL INVESTINGThe following 10 tips can help in the search for good investments 1. 2. Look for quality and competent management 3. Recognize that risk equals return 4. Look for shares that are undervalued 5. Do some research 6. Diversify 7. Don't try to time the market 8. Try dollar cost averaging 9. Invest for the long term 10. Make sure the shares are liquid if you have to sell RELATEDYOUR E-MAIL ALERTS(CNN) -- Punters who backed Bullish Luck at this year's Hong Kong Champions Mile in the Asian Mile Challenge series could be forgiven for thinking that picking last year's winner has some merit as a prudent betting strategy. The Hong Kong horse has managed to win the prestigious event at Sha Tin racetrack two years running. But will horse watchers take the same approach at this year's Royal Ascot in London with the 2005 winner of the Gold Cup, Westerner? There is often an inherent desire to put money on past performers without really thinking about it. What is it that says a horse that has won a race previously is going to win again? Herein lies the skill of the professional punter when it comes to picking the race form or an investment. Chasing last year's winners is an often-used investment style -- but one which highlights the risk involved in investing in the best performing sector of the previous year. It can be a tempting option for many investors -- especially since global stock markets have been on a record breaking run for the past couple of years. Different storyBut the quantitative data tells a very different story. Picking last year's winner actually provides a lower return than simply holding cash, with a comparable level of risk to investing in small companies -- which appears at the opposite end of the risk scale to cash. In the 22 years from 1984 to 2005, only once has the same international asset class outperformed three years running. Only twice in the same period was the same asset class the winner two years in a row. International shares -- as measured by the MSCI World Index -- was the best performing sector in 1984 with a return of 14.3 percent. In 1985, it returned an impressive 72.4 percent. But it was another four years before international shares were again the best performing sector, when they returned 26.2 percent in 1989. Had you backed it as a winner in 1990 on the strength of its previous performance, your investment would have gone backwards. International shares returned negative 14.4 percent. It was international fixed interest that shone in that year with a return of 13 percent. More recently, the MSCI outperformed international fixed interest in 1997,1998 and 1999 but was a marked underperformer -- even falling into negative territory -- for the three subsequent years when compared to other asset classes. So, when it comes to investing, how do you pick a winner? Firstly, if you don't have the time or inclination to do your own research on different asset classes and how they have been performing, give the task to a professional such as a fund manager. Which fund you eventually go with requires another selection process as there are literally thousands to choose from globally. Again, picking last year's winner may seem the easy option, but will not always work out as you planned. Two of the most important factors are the quality of the people (the fund managers themselves) and the investment process they use. Your choice of fund should be based on your goals and objectives, how long you want to lock the money away for and your risk profile. Perhaps a professionally qualified adviser can help you work through all these issues. To quote one fund manager: "Don't drive looking into your rear vision mirror." 
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