A good way to think about this question is to look at "The Callan Periodic Table of Investment Returns." The table ranks, on an annual basis, returns of nine sectors of the market. For 2010, it shows Growth stocks as having the best return at 29.09% and bonds, as represented by Barclay's Aggregate Index at the bottom, with a return of 6.54%.
A huge take away from the Table is that predicting the best performing sectors is, to put it mildly, very difficult. Consider the last 3 years. In 2008, Emerging International stocks were at the bottom--down 53%; in 2009, they were at the top with a 79% return; and in 2010, fourth from the top at 19.20%. The best approach for most investors is to diversify among the sectors on the basis of a well thought-out plan.
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Thoughts and observations for those investing on their own or contemplating doing it themselves.
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Wednesday, February 2, 2011
Were You In the Right Sector in 2010?
Posted by Robert Wasilewski at 7:26 AM
Labels: DIY investing, Portfolio construction
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LOVE the table.ReplyDelete
"The best approach for most investors is to diversify among the sectors on the basis of a well thought-out plan."
Your message never gets old Robert. Hopefully I'm listening and following instructions well.