Greetings!
If you noticed that the U.S. stock market posted its best January in 15 years, we hope the good start to the year brings some relief. If you hadn't noticed, we're happy for you. It means you're too busy enjoying your life to worry about what the market does from month-to-month or day-to-day. While returns for all assets (stocks, bonds, alternatives, U.S., international, etc.) were strong in January, a prevailing concern is that longer-term future returns will be lower than historical precedent. There are several reasons for this, some of which are covered in the articles below. If you have questions about the type of return you should expect -- or how much risk is inherent in pursuing your desired return -- please let us know. All the best,
Gary Brooks, Allyn Hughes, and Nancy Jones |
Recent returns reverse of expectations
To extend the topic of Gary's News Tribune article, please read our blog post about the mirror effect that has reversed performance of balanced portfolios since 2000.
We expect that portfolios with larger allocations to global stocks will present the highest returns (and also the most fluctuation). This holds true for long periods but we have been through a couple full market cycles since 2000 and more conservative portfolios have easily led. This post looks at performance for five stock/bond mixes from conservative to aggressive.
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100% stocks
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80% stocks / 20% bonds
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60% stocks / 40% bond
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40% stocks / 60% bonds
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20% stocks / 80% bonds
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Avg annual return 1973-2011
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11.66
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11.14
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10.27
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9.63
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8.83
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Avg annual return 2000-2011
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3.81
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4.61
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5.19
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5.57
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6.19
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2011
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-2.09
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-0.50
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2.26
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4.06
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6.40
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See the article for descriptions of each investment mix.
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Recent articles on our blog TheMoneyArchitects.com
Greece, land of the gods and debt (Nemesis is the Greek goddess who wreaks havoc and vengeance on the prideful. How much havoc she will wreak on the global economy should be known soon.)
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