Difference between revisions of "User:LadyGeek/Callan periodic table of investment returns"

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(→‎Putting the table into perspective: Added compounding sentence.)
 
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==Putting the table into perspective==
 
==Putting the table into perspective==
Periodic tables provide a great visual about diversification benefits, but tend to be more qualitative than quantitative. The simple ranking from best to worse notably does not allow one to easily appreciate the scaling of annual returns. The effect of compounding over the long-term is also hard to perceive with such per-annum table.<ref name="siamond">{{Forum post|p=5758819|title=Re: [wiki] Callan periodic table of investment returns|author=siamond|date=Jan 24,2021}}</ref>
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Periodic tables provide a great visual about diversification benefits, but tend to be more qualitative than quantitative. The simple ranking from best to worse notably does not allow one to easily appreciate the scaling of annual returns. The effect of compounding over the long-term is also hard to perceive with such per-annum table.<ref name="siamond">{{Forum post|p=5758819|title=Re: <nowiki>[wiki]</nowiki> Callan periodic table of investment returns|author=siamond|date=Jan 24, 2021}}</ref>
  
 
The following graphs are therefore useful to put such a periodic table in perspective.
 
The following graphs are therefore useful to put such a periodic table in perspective.

Latest revision as of 18:44, 26 January 2021

The LadyGeek/Callan periodic table of investment returns is patterned after Mendeleev's periodic table of the elements[2] and features well-known, industry-standard market indices as proxies for each asset class.[3]

The table shows returns for ten asset classes, ranked from best to worst. Each asset class is color-coded for easy tracking.[3]. It was created in 1999 by Jay Kloepfer.[3]

Overview

The chart is intended to show the importance of diversification across asset classes (stocks versus bonds), investment styles (growth versus value), capitalizations (large versus small) and equity markets (U.S. versus international).[4]

Refer to the table below. The rankings change every year, thereby demonstrating two key principles of investing:

  • Diversification: by owning the entire market (all of the asset classes), susceptibility to changes in market returns is minimized.
  • Past performance does not predict future performance.


Callan Periodic Table of Investment Returns.png

View full size ©2021 by Callan LLC. Reprinted with permission.

History and changes

The composition of the table has changed over the years.

Year Changes made
1999 Created with eight (8) asset classes.
2010 Emerging markets asset class added, bring number to nine.
2013 the addition of Barclay's Corporate high yield brought the total to ten.
2017 "MSCI World ex USA" replaced "MSCI EAFE". The entire table was rebuilt using "MSCI World ex USA".
2019 The S&P 500 Growth, S&P 500 Value, Russel 2000 Growth, and Russel 2000 Value were replaced with Global Bonds ex-US, Cash equivalent (90 day T-Bills), and Real Estate. The entire table was rebuilt.

The prior spreadsheets are at Callan Periodic Chart 2017: Dispersion of Asset Class Returns and Callan Periodic Table 2017: Statistics

How to read the table

For example: Real estate (a measure of the stock performance of companies engaged in specific real estate activities in the North American, European, and Asian real estate markets). Starting at the left side, this measure ranked:

  • 2001 - 7th
  • 2002 - 2003 - 3rd (2 consecutive years)
  • 2004 - 1st
  • 2005 - 2nd
  • 2006 - 1st
  • 2007 - 9th
  • 2008 - 8th
  • 2009 - 3rd
  • 2010 - 2nd
  • 2011 - 7th
  • 2012 - 1st
  • 2013 - 5th
  • 2014 - 1st
  • 2015 - 4th
  • 2016 - 5th
  • 2017 - 2018 - 6th (2 consecutive years)
  • 2019 - 4th
  • 2020 - 9th

Putting the table into perspective

Periodic tables provide a great visual about diversification benefits, but tend to be more qualitative than quantitative. The simple ranking from best to worse notably does not allow one to easily appreciate the scaling of annual returns. The effect of compounding over the long-term is also hard to perceive with such per-annum table.[5]

The following graphs are therefore useful to put such a periodic table in perspective.

Callan table asset class performance 2001-2020.png
Notes: Created with Python Jupyter Notebook. See: Bogleheads® forum post: Re: [wiki] Callan periodic table of investment returns, jsprag. Jan 24, 2021


Callan table annual returns.svg
Source: Callan Periodic Table: Statistics - Google Sheets


Callan table CAGR starting at 2001.svg
Source: Callan Periodic Table: Statistics - Google Sheets


Callan table growth of 10K since 2001.svg
Source: Callan Periodic Table: Statistics - Google Sheets

Create your own periodic table

A spreadsheet for creating your own periodic table is available in this Bogleheads® forum topic: Playing with Callan's periodic tables of investment returns.

The latest version and download instructions are in this post, which is a direct download from Google Drive.

Detailed instructions and revision history are in the "README" tab.

See also

References

  1. Bogleheads® forum post: Re: Playing with Callan's periodic tables of investment returns, LadyGeek. September 7, 2018
  2. Mendeleev's periodic table of the elements, Retrieved August 30, 2013
  3. 3.0 3.1 3.2 "Periodic Table - Callan". Callan Institute. Retrieved January 19, 2021.
  4. The Callan Periodic Table of Investment Returns (Key Indices: 1998-2017), viewed Sep 07, 2018.
  5. Bogleheads® forum post: Re: [wiki] Callan periodic table of investment returns, siamond. Jan 24, 2021

External links

Forum discussions