Morningstar’s John Rekenthaler shared a wild statistic about Yale’s endowment fund in a piece published yesterday: The fund’s reputation, however, owes to its earlier accomplishments. In the 10 years from mid-2008 through mid-2018 (the latter being the date of the fund’s most recent report), Yale gained an annualized 7.4%. During that same time period, the…
Search Results for: "10 year return"
Shifting Risks in the Bond Market
The Fed has raised interest rates nine times since December 2015. As much as some prognosticators would have you believe the Fed completely manipulates the interest rate markets, they really only have control over short-term rates. Long-term rates have a mind of their own and the bond market doesn’t always agree with the Fed on…
Updating My Favorite Performance Chart for 2018
It’s become an annual tradition on this blog to update asset class returns on an asset allocation quilt I created for a few reasons: (a) Asset allocation is typically the most important aspect of portfolio management so understanding how the various asset classes performed is instructive when trying to understand your results. (b) This is a…
Expected Risk
“The essence of investment management is the management of risks, not the management of returns.” -Benjamin Graham Investors spend a lot of time trying to figure out what returns the markets will give them in the future. It feels like a weekly occurrence that I see another fund firm or well-known investor trot out their forecasts…
When Market Signals Look Too Good to be True
Interest rates are a huge driving force behind many investment decisions. You can call them discount rates, hurdle rates, lending rates, borrowing rates or whatever, but their level definitely has an affect on risk appetites. But I also think it’s possible for investors to put too much faith into the almighty interest rate. For instance,…
Strong Jobs Market, Weak Stock Market
It may not feel like it for certain parts of the population, but the U.S. employment picture has continued to get stronger over the past few years. Job growth has averaged 150,000-250,000 jobs a month for the past 5 years or so. 2015 saw one of the best years for job growth since 1999. According to the…
Mean Reversion From the Lost Decade
A decent bull market sandwiched between two of the most brutal bear markets in history produced one of the worst 10 year stretches ever in the S&P 500* in the first decade of the 21st century. Many investors labeled the 2000s as the lost decade for stocks. Considering the S&P lost around 1% a year…
Move to the Beach and Live Off the Interest?
In nearly every heist movie from the 80s and 90s, the bad guys would always talk about stealing enough money to find a place on the beach and live off the interest. Here’s a classic from Hans Gruber in Die Hard (h/t Meb Faber): “Sitting on a beach, earning 20%” isn’t going to happen these…
What If Everything Is Overvalued?
Stock valuations are getting into potentially overvalued territory. Bond yields — from government to high yield to corporates — have all fallen precipitously since the financial crisis. Real estate, venture capital and private equity are also likely reaching above average valuation levels. It’s tough for investors to know what to do in this situation. Zero…
A Historical Look at a 50/50 Portfolio
Last year I wrote about the worst 10 year returns earned on a simple 50/50 portfolio of stocks and bonds. A reader recently dug up that post and asked for some further information and a look at different scenarios on the returns of a 50/50 portfolio made up of the S&P 500 and long-term U.S….
