![]() This stuff is pretty basic but investors often need a reminder to understand the possibilities based on their asset allocation. And if you want higher long-term expected returns, you have to learn to live with more volatility in the short-term. If you want more predictability in the short-term, you have to learn to live with lower long-term returns. These fluctuations are explained by the fact that stocks have returned a little more than 7% above the rate of inflation while bonds and cash have real returns of 2.2% and 0.5%, respectively. Now here are all three next to each other to gain a cleaner look at them side-by-side:Īt first glance, most investors probably wonder why they would ever accept the insanity of the stock chart when they could take the relative calm of the bond or cash return stream. These graphs provide a nice visual of the risk-reward relationship that exists in these various asset classes. It may be surprising to some to see so many slightly negative years but that’s what happens when there’s above average inflation, even when rates were in double-digit territory in the late-1970s and early-1980s.Īnd here are after-inflation bond returns using 5-year treasuries:Įven bonds give you a somewhat bumpy ride around the long-term averages. Carefully consider the investment objectives, risks, charges and expenses before investing. Investment Returns, Risks and Complexities. time frame (same as above), compare to index (DJIA, S&P 500, NASDAQ, and Russell 2000), compare to stock symbols, and compare to industry (a drop-down box of each industry) U.S. See an in-depth, side-by-side comparison for up to five mutual fund, CEF and ETF symbols: Enter up to 5 fund symbols (separated by commas): Compare Symbol lookup. Here are the cash returns using one-month t-bills as a proxy: Performance Comparison Charts Up to Ten Comparisons on a Single Chart with Other Stocks, Mutual Funds and Indexes. I used real returns to account for the fact that nominal interest rates can make the bond and cash returns look higher than they appeared in the past. While updating this graph I decided to see how this format would look using different asset classes so I could compare stocks, bonds and cash. These inconsistencies are one of the reasons the stock market befuddles so many people. It’s also interesting to note how few annual returns are anywhere near the long-term average. The red line is the average so you can see how wide the fluctuations are from year to year. ![]() The Compare Tool will open a new window that shows the charts of the selected stocks side by. Here are the S&P 500 calendar year returns shown as a scatter plot: This easy-to-use tool compares similar stocks and funds on key financial statistics, to help you find the right pick for your investing strategy. Once you have selected the stocks, click on the Compare button. Updating Some Performance Charts & What I’ve Been Reading LatelyĪ reader asked this week if I would update an old performance chart of the S&P 500 I used a few years ago.
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