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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.

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  • Thanks for posting
  • Looking at the bottom three rows in the right hand column confirms why my portfolio returns sucked in 2018!
  • edited January 9
    U.S. Fixed Income came in second (2018) with a +0.01% return. LOL
  • MJG
    edited January 9
    Hi Guys,

    The Callan Periodic Table is a great way to visually demonstrate the wild gyrations that reflect market group annual returns. What goes up is sure to go down in a mostly random, nonpredictable manner. Some skill helps to predict a reversion-to-the-mean tendency, but the uncertainty about next year's returns emphasizes that much luck is a major factor in everyone's portfolio returns. Luck matters and in general overwhelms an individual's skill. Sorry, but true.

    Best Wishes for a lucky new year. 2018 was a tough nut for most of us.
  • edited January 10
    I like this chart because it presents a global perspective of the major nine asset classes.
  • An excellent visual aid for showing the benefits and frustrations of having a diversified portfolio.
  • Useless for investment purpose, but fun to look at.
  • Hi Guys,

    If anyone identifies a pattern in this tangle let us know about it. It is a mess. The only information that is revealed is that the markets are random and not predictable. That just might be enough to make a point.

    Best Wishes
  • For me, the table speaks volumes about why one would want diverfication within their portfolio.
  • Interesting that 2018 was the only year CASH WAS KING in the past 20 years. Before 2018, it came in 3rd a few times, but never 1st or 2nd.
  • edited January 13
    Hello: For what it is worth. I've been looking at the table and did an analysis of the top three asset class leaders for the past 20 years, 10 years and 5 year lookback periods. For the twenty year lookback period real estate appeared 10 times, emerging markets 9 times and US fixed income 8 times along with non US equity. For the ten year lookback period US large caps appeared 5 times and real estate, emerging markets, US fixed income along with high yield all appeared four times. For the five year lookback period US large caps appeared 4 times, US fixed income 3 times and high yield and cash appeared 2 times. These were the top three leaders over the respective time periods according to the table.

    With the above in mind this is one of the reasons I feel I am better off with a well diversified portfolio not knowing which asset class will be the annual top three leaders thus I feel it is better for me to own and position some of each. Now, I might hold more of some over others based upon my perception of what might be working (or going to work) the best in the near term.

    So, for me, the table does provide investment value and demostrates why diverification works.
  • Hi Old Skeet,

    I agree with you that the given Table is a terrific tool that demonstrates the general value in diversification.

    There is also an easy to use tool that more numerically demonstrates the value of diversification. The website Portfolio Visualizer is one such useful tool. Here is a Link to that investor resource:

    https://www.portfoliovisualizer.com/asset-correlations

    Owning a large number of funds doesn't guarantee diversification. Some just move in near lock step with one another and have a high correlation coefficient. The Portfolio Visualizer tool can be used to test correlation coefficients. For example compare the performance between FCNTX and FLPSX and secondly the performance between FCNTX and CSRSX. Not unexpectedly, the first comparison yields a high correlation coefficient (0.92) while the second shows the value of real diversification (0.64).

    The Portfolio Visualizer addresses this issue directly with hard data and specific numbers. Please give it a try although I suspect you are very familiar with that website product already. Others might not be so familiar with this correlation coefficient generator. That possibility is the reason for my comment contribution.

    Best Wishes
  • @Old_Skeet: I took the low road. Bottom 3 for last 20,10,5 years.
    20 yrs. non & u.s. fixed 11 times , cash 8
    10 yrs. non & u.s. fixed 7 - 6 times, em &cash 5 a piece
    5 yrs. non-fixed 3 , em,cash, non u.s equty, u.s fixed, hi yield 2 a piece.

    Good investing to all, Derf
  • edited January 13
    I have never believed in conventional wisdom. Maybe I should reword my statement. As someone who worked minimum wage and part time jobs, diversification was not an option.

    Edit. Somewhere in my pile of clippings I have an article from the WSJ about “waking up a millionaire “. I think it was from the summer of 1997. It was about all the millionaires created since the early 80s by Mom and Pop investors who had their 401ks in one investment - an [email protected] index fund.
  • edited January 13
    Hi @Derf & @Junkster: I think the high road was more productive. And, then there is Junkster as we can not discount what he as done with his ability to trade in and out of positions. One of the great things about investing is that there is no one pathway to success.

    For me, I plan to remain well diverisfied but weight more towards what has worked more times than not over the past rolling five years. With this, will cash make a third apperance? I'm thinking that it will and I have weighted my cash allocation accordingly which, for me, includes US currency, cash savings, money market funds and CD's.

    It will be interesting for me to see how my new asset allocation of 20% cash, 40% fixed income and 40% equity rolls during the coming years. Also, remember, I hold a good number of hybrid funds that make up better than 40% of my overall portfolio. These hybrid fund managers change their fund's asset allocations (within certain ranges) based upon their read of the forever changing investment climate. To me, this adds some good flexability to my portfolio making it more adaptive to the markets than I would otherwise have.

    I wish all "Good Investing" and continued success.

    Old_Skeet
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