FYI: The chart below shows several issues investors struggle with all the time. It’s difficult to pick the best performing investment year after year, yet for many investors, it’s an annual event. They look for an encore, picking the best asset class last year with the hope of a repeat performance. Yet, betting on last year’s winner rarely works out.
Assets at the top of the chart one year could be at the bottom the next, and vice versa. Much of this is due to reversion to the mean. But over the long-term, those big swings even out. The chart shows annual returns for eight asset classes against a diversified portfolio. Diversification works to smooth out those big swings in the short-term. While you’ll never get the biggest gains of any year, you avoid the huge losses.
The table below ranks the best to worst investment returns by asset class over the past 15 years. Hover over the table to highlight the asset class returns.
Regards,
Ted
https://novelinvestor.com/asset-class-returns/
Comments
Thanks for the references to the various forms of the investment Periodic Tables. In one simple graph the annual return variability of various asset classes is nicely illustrated with the color coding schemes. These graphs tell a very enduring truth.
From Matthew 20:16 in the King James Version (KJV) of the bible: "So the last shall be first, and the first last: for many be called, but few chosen." Staying on top is an investing challenge that most fail. These graphs document the roiling turmoil that promote those high failure rates, even among professional folk. These data reinforce the case for broad diversification.
Best Wishes