The colorful and entertaining Callan ‘Periodic Table’ was recently updated with 2018 market results. It tracks the investment returns of key indices over the past two decades. The most recent year – the 20th in the chart – was challenging. As you can see, cash was king and few investments posted positive returns.
I have often referred to the chart as “fascinating, but useless” because it’s patchwork quilt of colors seems to defy any real pattern or logic. Anyone who thinks they can peg the next hot asset class by studying it will be terribly disappointed to be reminded that “historical returns are no guarantee of future performance”.
Instead, I would use it as an annual reminder that one should rebalance their portfolio regularly. Thinking there are any historical insights that might help you adjust your asset allocation with the hopes of ‘timing the market is a fool’s errand.
Image Credit: Callan
MrFireStation 
I Love ‘Market Timers.” Their fast-twitch muscles are rarely as fast as market twitches. Mistakes they make along the way often end up benefiting ‘Long Termers’ like me. Unless and until my goals change, my strategies remain constant. Annual rebalancing helps keep allocations in line with the tactics designed to deliver against long term strategies. As an investor with 40 years experience, so far, so good.
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Yes – the inevitable inefficiency of Day Traders & Market Timers create a benefit for everyone else. I’ve often been curious if I could make money in excess of the broader indices over the course of a year or so, but it seems like too much work to even ‘play’ with a little investment fund!
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Agreed. Most of the discussions on market timing are focused on buying and selling a single asset. However, as you mentioned, market timing is also guessing which asset class will out perform. A core investment discipline is to recognize if you are guessing or do you have data and an insight that the broader market does not. If you are relying on general or advertised information, it might be guessing.
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Agree – I think you can find strategic reasons to invest in one asset class versus another. As you say that would be leveraging a real insight, most others aren’t using.
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