“We are, as a species, addicted to story. Even when the body goes to sleep,

the mind stays up all night, telling itself stories.” - Jonathan Gottschall, The Storytelling Animal

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Historical Risk & Return Tables
Latest MarketWatch Article
Latest Podcast
Testimonial

Dear Friends,

My work teaching do it yourself investors began over 40 years ago. My challenge, and I suspect the challenge of most teachers, is to create information or “tools” that make the biggest, and lasting impression, on the student.

Many experts believe a story leaves the greatest long term impression. I asked ChatGPT, in 50 words or less, to tell me why storytelling is an important way to teach. Her answer:

ChatGPT:
"Storytelling captivates attention, making information memorable and relatable. It engages emotions, aiding comprehension and retention. Through narratives, complex concepts become accessible, fostering empathy, understanding, and effective learning.”

My teaching has taken a different path. I have hoped the history of investment “results” would offer students a meaningful story that would hopefully create a level of trust, that will give them the strength of belief to stay the course over a long period of time.

Over the years we have created tables of historical data that reflect the good, the bad and the ugly of investing during both the accumulation and distribution periods of the investment journey. The Fine Tuning, Fixed Contribution and Distribution Tables are the most popular examples of those tables.

Daryl Bahls, our Director of Analytics, has been producing these tables for many years. His latest set of tables has focused on the relationship of risk and return in a new way. My hope is these new tables will help first time investors have a better sense of the wild short term ride they might have to endure to realize the wonderful long term return the markets have produced in the past.

These 4 tables compare the both short and long term historical risk and return of the S&P 500, Small Cap Value, a 2 fund portfolio that’s 50/50 S&P and SCV and 4 fund portfolio with 25% each in S&P, Small Cap Value, Large Cap Value, and Small Cap Blend.

Here is an article Rich Buck and I wrote for Marketwatch about two of the tables.

I have a favor to ask: This is the first time we have shared these tables. I am sure there will be some fine tuning of the data. I would also like to have similar tables for bond funds over the same period. I think they may be important to first time investors who believe they don’t want to take any risk. It is also possible there would be some value to see the data adjusted for inflation. Please let me know what comments and questions these tables generate. Please share them with me at paul@paulmerriman.com.

Want great investing returns without great risk? It’s possible if you do these two things.

Investors want lots of things, but two of them stand out above all others: They want above-average long-term returns without taking additional risk.

Fortunately, it’s not hard to get those results. First, you have to diversify beyond the familiar and comfortable S&P 500 index SPX ; second, you need patience to wait for your results, which won’t happen all at once.

If you can do those two things, history overwhelmingly shows the odds are stacked in your favor. If that seems too good to be true, I’m about to show you the numbers-based evidence. Read article here.

Latest Podcast- A new way to look at risk and return

Paul wishes to warn podcast listeners that this podcast contains a lot of important numbers from the following 4 tables. The torrent of numbers can be irritating but these are some of the most important aspects of risk and return we should know. Paul asks that investors email him with questions about the tables. ⁠paul@paulmerriman.com⁠

In this podcast Paul introduces a new way to understand and compare the likely risk and return of equity asset classes. The biggest challenge for first time investors is not understanding the likely losing periods they will experience as part of the normal progression of successful investments.

⁠These 4 tables compare the both short and long term historical risk and return of the S&P 500, Small Cap Value, a 2 fund portfolio that’s 50/50 S&P and SCV and 4 fund portfolio with 25% each in S&P, Small Cap Value, Large Cap Value, and Small Cap Blend.

Testimonial

It is a little embarrassing to share a quote that is so self serving but these comments give us hope that our work is accomplishing our goals. We are thrilled anytime we learn that an investors peace of mind has been improved due to a better understanding of the past, we are thrilled when we learn the young members of a family are being impacted as they might take advantage of a lifetime of compounding and finally that the information may be shared beyond the family. Thank you for sharing the impact of our teachings.

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In This Edition Historical Risk & Return TablesLatest MarketWatch ArticleLatest PodcastTestimonial

In This Edition

Historical Risk & Return Tables
Latest MarketWatch Article
Latest Podcast
Testimonial

Important new table for long term investors