How long can the unexpected continue?

Paul begins this podcast by reviewing long-term returns of the 4 major equity asset classes for the 94 years ending 2021, before moving on to the focus of the podcast: our quilt charts. The most useful single table, of all the tables created by Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation, is entitled, “U.S. 4 Asset Classes and 4-Fund Combo Relative Performance Rankings (1928-2019). The table offers many important lessons to give investors an improved set of return expectations.

The brightly colored years, including each year’s return, make it easy to see the highly random sequence of returns. It becomes very obvious how long the unexpected can continue. And, most importantly, it shows the dependability of the 4-Fund Combo. Since the S&P is considered the benchmark for investors, it is helpful to compare results over longer periods of time. Those results are shown on the table entitled, “Annualized Asset Class Nominal Returns by Decade: 1930-2019.” While past returns are no guarantee of future returns, the case for higher rates of return with similar-to-lower-risk is a high probability.