Just like oil prices, other energy stocks and the funds that invest in them are on a meteoric rise. The Vanguard Energy Fund, for example, has witnessed its share price rise more than 50% in the past year, as of July 31, according to officials at the Valley Forge, Pa., fund complex. As a result, Vanguard took the unusual step off issuing an investor warning at its Web site.
"Unfortunately, many investors fall into the behavioral trap of buying what has performed well in the past," said Joseph Brennan, a principal in Vanguard's Portfolio Review Group. "This sets many investors up for disappointment, as strong performance is usually followed by periods of underperformance."