Comments on: 2009 Callan Periodic Table of Investment Returns

By: Tyrone Biggums

Tyrone Biggums — Thu, 04 Jun 2009 14:31:53 +0000

This annual table always illustrates the same principle: investors who chase returns are playing a losers’ game. Sadly, this is how Joe Sixpack invests.

The key is to develop an asset allocation and stick to it, no matter how markets are doing. I overweigh small value due to better long-term returns also. Most common investors ignore value, and stick to growth because they are misled by the category names. They think growth funds have the best returns, when in fact, they have among the lowest.

By: Dan

Dan — Tue, 02 Jun 2009 19:59:43 +0000

The Callan table is great. But I also like this similar table from IFA that includes asset classes such as REIT, Emerging Markets, and International Value.

http://www.ifa.com/pdf/IFA_per.....huffle.pdf

By: John

John — Tue, 02 Jun 2009 19:22:20 +0000

It would be interesting to find ETFs for each of these asset classes and then create a diversified portfolio with the ETFs. Rebalance the portfolio once every year and then you are good. This could be a good topic for a future post.

By: Tim

Tim — Tue, 02 Jun 2009 16:12:47 +0000

This is a little off-topic, but I dumped the data into Excel and looked at the IRR for each asset class (with a constant contribution on the first of every year). They worked out to:

Russell 2000 Value: 8.88%
BC Agg: 6.52%
Russell 2000: 5.99%
S&P 500 Value: 5.51%
S&P 500: 5.40%
S&P 500 Growth: 4.96%
MSCI EAFE: 2.73%
Russell 2000 Growth: 2.42%

If you ignore 2008 (wish that was possible), you get:

Russell 2000 Value: 12.61%
S&P 500 Value: 10.49%
Russell 2000: 10.23%
S&P 500: 10.07%
S&P 500 Growth: 9.33%
MSCI EAFE: 8.32%
Russell 2000 Growth: 7.27%
BC Agg: 6.63%

By: Thad

Thad — Tue, 02 Jun 2009 14:06:21 +0000

A small tweak that would be of interest is to have a line marking positive vs negative return running through the table. That way you can tell a rising tide for all boats vs a true selective return environment. Like you said, “worst” is ’95 was 11% but “best” in ’08 was 5%!

By: Kent @ The Financial Philosopher

Kent @ The Financial Philosopher — Tue, 02 Jun 2009 12:53:33 +0000

The Callan chart always brings back memories of my early days of investment advisory work (1998). I studied the Callan chart for hours looking for (and seemingly finding) patterns.

The lessons I learned from the chart and attempting to add value as a money manager for my clients was that the attempt to “beat the market” only increased the odds of losing to it.

I also learned that an investor can “find a pattern” anywhere if they look hard enough. If the investor finds something that works for a month, a year or even a few years, their over-confidence can kill them later when the pattern no longer applies (or the investor discovers there never was a pattern).

While the markets are not absolutely random, and finding inefficiencies is certainly possible, the effort spent and added risk in attempting to “beat the market” is not worth it (unless the investor simply loves the research and enjoys the process).

“A hidden connection is stronger than an obvious one.” ~ Heraclitus (c.536-470 BC)

“Too keen an eye for pattern will find it anywhere.” ~ T.L. Fine

By: ChrisMR

ChrisMR — Tue, 02 Jun 2009 01:29:22 +0000

watch the movie pi, it will explain everything
http://www.imdb.com/title/tt0138704/

By: Patrick

Patrick — Mon, 01 Jun 2009 22:19:06 +0000

This is a great find! This will come in handy trying to explain the value of diversification, or asset allocation to my family members. Thanks!

By: Andy

Andy — Mon, 01 Jun 2009 13:22:01 +0000

Here are some YTD numbers for 2009:
Russell 2000 Growth: +10.86%
S&P 500 Growth: +9.16%
MSCI EAFE: +6.91%
Russell 2000: +6.12%
S&P 500: +2.98%
BC Agg: +1.54%
Russell 2000 Value: +1.46%
S&P 500 Value: -1.57%

So far this year has been good for growth and small cap.