Tag Archives: diversification

How Low Can the Stock Market Go?

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A theme that runs on this blog is to not take anything for granted in terms what will happen while investing. In particular, I often mention the idea that any asset can fall in price very steeply at any time and for a multitude of reasons. Stocks in particular have had a very storied history in this regard. Wade Pfau made a post aggregating the worst stock market losses by country over the past 100 years: How Low Can the Stock Market Go? Here are some excerpts from his post. Check the link to see the rest: Australia 1970-74  -66% Finland   1917-21  -85% Continue reading →

Callan Periodic Table of Investing Returns 2011

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I love the Callan Periodic Table of Investing Returns. This chart shows major asset classes and how they’ve done from 1992-2011. It shows very vividly the unpredictable nature of the markets and why holding a diversified investing portfolio is a good idea. It doesn’t show gold and long-term bonds that the Permanent Portfolio also uses, but the general idea still comes across. Callan Periodic Table of Investing Returns Thanks to the people at Callan for putting this together.

The Misleading Stocks for the Long Run Chart

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  I see this chart posted from Jermy Siegel’s book Stocks for the Long Run from time to time to defend why owning lots of stocks is the way to go and why owning gold is some kind of chump move. Well I think this chart is misleading for several reasons. Gold is useful in a diversified portfolio along with stocks and bonds. It should not be 100% of a portfolio just as stocks shouldn’t be nor bonds. First let’s explain a few things about this gold line you see here. We must understand that for the first 130 or Continue reading →