Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
A recent AAII article showed that beginning with equal investments in the S&P 500 sectors and rebalancing yearly from the best performing sectors to the lesser performing ones increased one's returns substantially over time. However that must be taken with the willingness to go through all the watching and rebalancing efforts required. Your choice.
Maybe using this chart to rebalance one's portfolio at the end of each year might be an interesting study.
These data are a great set that demonstrates randomness. If a pattern does exist it completely escapes me.
Does anyone see some semblance of a pattern here? If you do, your’e far more insightful than me Gunga Din. But that is too easy a challenge.
The references all provide terrific ways to present complex data in a meaningful and understandable way. Hooray for them all. Hooray for us potential users.
@MJG, Well, one thing that struck me, and I am sure others way smarter have smarter things to point out, is that balancing RE and LC may serve one well over time. Perhaps w some bonds.
Just squint for pattern recognition around the middle, and the swings back and forth, with avoidance of the outliers / endpoints.
Of course, maybe that's bunk, when I squint at gold and internatl bonds ....
Some investment classes move up and down together. Obviously, these classes do not provide real diversification. A look at all classes returns data over time shows the degree of correlation among various asset classes. The higher the number, the less meaningful as a diversifier. Here is a Link that provides recent and useful correlation data:
Christine Benz from Morningstar has also examined asset class correlations. I believe this is her latest article on the subject. The PDFs linked below depict historical asset class correlations over various time periods. 1 Yr 3 Yr 5 Yr 10 Yr 15 Yr
Unfortunately long term performance was off since 2010. The SP500 did better than the rest (SC=IWM, GLD, international=FSPSX, EM=EEM and REIT=VNQ) + had lower volatility and why I don't pay attention to historical returns and I'm never over diversified. See 10 year (chart) of the above.
@FD1000, go back a decade and notice what a difference that decade (2000-2010) made for the S&P 500 where it lost 20% of its total value (inflation adjusted). Then there were the nineties (1990-2000) were the S&P 500 grew 340% (inflation adjusted).
When you get on this roller coaster is as important as how long you ride it.
The S&P 500 has generated excellent returns over the trailing 10 years. However, its performance the preceding 10 years (11-27-2000 to 11-26-2010) was subpar. Small Caps (IWM), REITs (VGSIX), International (VGTSX), Emerging Markets (VEIEX), and Investment-Grade Bonds (VBMFX) vastly outperformed the S&P 500 during this period. Link The $1M question: How will these asset classes perform in the future?
@little5bee : All REITS or do you have a favorite ? A lot of people working from home now. I believe most will continue if given the chance, Have a good weekend, Derf
HFSAX...Hundredfold Selective Alternative Fund...which has a $1 million minimum initial investment at Schwab, is apparently 100% invested in real estate, according to Schwab website. I like to screen for low risk/high return funds and this one regularly pops up.
Comments
https://www.callan.com/wp-content/uploads/2020/02/Periodic-Table-Collection.pdf
https://sectorspdr.com/sectorspdr/tools/sector-tracker
These data are a great set that demonstrates randomness. If a pattern does exist it completely escapes me.
Does anyone see some semblance of a pattern here? If you do, your’e far more insightful than me Gunga Din. But that is too easy a challenge.
The references all provide terrific ways to present complex data in a meaningful and understandable way. Hooray for them all. Hooray for us potential users.
Best Wishes
Very interesting data. Thanks.
Well, one thing that struck me, and I am sure others way smarter have smarter things to point out, is that balancing RE and LC may serve one well over time. Perhaps w some bonds.
Just squint for pattern recognition around the middle, and the swings back and forth, with avoidance of the outliers / endpoints.
Of course, maybe that's bunk, when I squint at gold and internatl bonds ....
Some investment classes move up and down together. Obviously, these classes do not provide real diversification. A look at all classes returns data over time shows the degree of correlation among various asset classes. The higher the number, the less meaningful as a diversifier. Here is a Link that provides recent and useful correlation data:
https://www.guggenheiminvestments.com/mutual-funds/resources/interactive-tools/asset-class-correlation-map
These are important data when making asset class investment decisions. Employ, profit, and enjoy.
Best Wishes for you and your investment outcomes.
I believe this is her latest article on the subject.
The PDFs linked below depict historical asset class correlations over various time periods.
1 Yr
3 Yr
5 Yr
10 Yr
15 Yr
See 10 year (chart) of the above.
When you get on this roller coaster is as important as how long you ride it.
However, its performance the preceding 10 years (11-27-2000 to 11-26-2010) was subpar.
Small Caps (IWM), REITs (VGSIX), International (VGTSX), Emerging Markets (VEIEX), and Investment-Grade Bonds (VBMFX) vastly outperformed the S&P 500 during this period. Link
The $1M question: How will these asset classes perform in the future?
@little5bee : All REITS or do you have a favorite ? A lot of people working from home now. I believe most will continue if given the chance,
Have a good weekend, Derf
REIT Sectors
www.kiplinger.com/slideshow/investing/t044-s001-the-10-best-reits-to-buy-for-2020/index.html