Callan Periodic Table of Investment Returns
The Callan Periodic Table of Investment Returns demonstrates that the market can function and flow in many ways from year to year. The Callan Periodic Table of Investment Returns ranks each category box from highest to lowest return over each calendar year. For instance, 2018 was a very low return year across almost all boxes. First place goes to Cash Equivalent, +1.87%; next is U.S. Bonds, +0.01%. In a year like 2018 of negative stock markets, the number-one return comes from the safest and most stable category. Meanwhile, Emerging Markets, -14.58%; Non-U.S. Stocks, -14.09%; Small Companies, -11.01%. Large U.S. Companies were -4.38% – not great, but not -15%.
While there may not seem to be much rhyme or reason to the stock market’s wild swings between winners and losers, there’s a clear case to be made that diversification is the best strategy over the long haul. Dissecting the stock market into categories and then tracking those dissected categories as a whole and individual relative to each other can help you learn a lot about how the markets tick over time. While the stock market can be broken into many different categories, for this example we will use Asset Classes (stocks vs bonds), Capitalization (large vs small), and Equity Markets (U.S. vs non-U.S.). Let’s take a look.