Investment advisor Callan Associates released the annual update to their Periodic Table of Investment Returns:

Callan Periodic Table of Investment Returns 2008

If you’ve never seen it, the Callan Periodic Table shows common asset classes and their returns each year back to 1989. The table doesn’t list all the assets that the Permanent Portfolio uses (it’s missing Gold [+5% in 2008] and US Treasury Long Term Bonds [+33% in 2008]), however it gets a point across. What point is that you ask?

The markets are not predictable – Something you’ll hear me repeat over and over again on these pages. 

This table shows some assets doing well for a couple years and then falling from grace. Then the losers rise to carry the title of hot performer until they finally go down in flames. This is the way of the markets. In fact, Harry Browne used to say:

“Investment success begins the day you accept the fact that you cannot predict the future”

This is excellent advice. 

The benefit of the Permanent Portfolio strategy is you’ll usually have an asset doing well no matter what is going on in the economy. This asset can often offset your losses in the other parts of the portfolio or at least dampen serious losses. To capture your gains, the strategy has you selling down your winners and putting that money into the under-performers which may do well going forward. The net result is a smooth stable growth through the years without the volatile gut wrenching swings in portfolio value.

All of this can be done without turning yourself inside out relying on fortune tellers, market timing, predictions, chart analysis, reading mountains of investment news and hoping that your risky gamble doesn’t leave you in the poor house. Once you accept that the markets cannot be predicted you are able to adopt an investment strategy to deal with this uncertainty and sleep at night.

Market timing doesn’t work, but it’s not the end of the world. In fact, this realization is critical to investment success. So let go and trust the Force, Luke. You’ll be a better investor for it.

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