Callan periodic table of investment returns (quilt charts)

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
Posts: 232
Joined: Sat Apr 20, 2013 12:56 am

Callan periodic table of investment returns (quilt charts)

Post by schuyler74 » Wed Apr 30, 2014 11:10 pm

The Callan periodic table of investment returns in the Bogleheads wiki resembles the picture below. Investment "quilt charts" like this make it plain that the various asset classes and sub-asset classes rise and fall over time, and often very quickly from one year to the next. This year's winner may very well be next year's loser. Since that's the case, why not just sell your best performing asset each Dec-31 and dump it all into that year's worst ? Seems like a can't-miss proposition. If a particular investment has had a recent bad run, isn't it "due"? Buy-low / sell-high!


Posts: 1174
Joined: Wed May 09, 2012 10:21 pm

Re: Callan periodic table of investment returns (quilt chart

Post by HurdyGurdy » Thu May 01, 2014 12:03 am

The numbers are there, we can run them.

In Jan 1/1998 I took $10,000 and bought Intl, right? it grew 20.3% so in Dec 31/1998 I have $12,030. Then I took those and bought REITs. Darn, I' m down -4.6%, to $11,476.62. Rinse and repeat.

Code: Select all

1998	20.30%	1.203
1999	-4.60%	0.954
2000	26.40%	1.264
2001	-21.20%	0.788
2002	-15.70%	0.843
2003	28.70%	1.287
2004	1.30%	1.013
2005	3.00%	1.03
2006	3.80%	1.038
2007	7.20%	1.072
2008	-37.70%	0.623
2009	32.50%	1.325
2010	0.10%	1.001
2011	0.70%	1.007
If I typed them well, the second column is that years return for the asset that did worst the year before. Third column is just second 1 + second column. So, multiply $10,000*1.203*0.954*...*1.007 = $11,981.18

Morningstar says that $10,000 put in Vanguard's LifeStrategy Moderate Growth (VSMGX), in early January 1998, became about $19,650 in early January 2012. Morningstar shows total return, so this may not be a fair comparison, plus those VSMGX funds changed a lot in those years, so the numbers may differ.

Edit: and it depends a lot on the years. The complete table, from 1994 to 2013, shows more weird "runs".

Posts: 203
Joined: Thu Apr 10, 2014 9:45 pm

Re: Callan periodic table of investment returns (quilt chart

Post by d0gerz » Thu May 01, 2014 12:20 am

I did the same calculation as JuanZ essentially, except I assumed that the investor was lucky and started on January 1, 1997 in Large Cap, earning a 33.4% return.

If we follow the 'sell everything and buy lowest' strategy, a 10,000 investment over 15 years accumulates to 15,982.9 or 3.18% compounded annually.

If instead we stay in large cap throughout, it accumulates to 23,735.19 or 5.93% annual growth.

User avatar
Posts: 6709
Joined: Tue Jul 23, 2013 5:31 am

Re: Callan periodic table of investment returns (quilt chart

Post by JoMoney » Thu May 01, 2014 6:17 am

schuyler74 wrote:... If a particular investment has had a recent bad run, isn't it "due"? Buy-low / sell-high!
Based on this thread, and your other one here: ... 0&t=138202
I think you're focused on the wrong thing if you're hoping to make money through market fluctuations. There are different ways people try to profit from fluctuations in both casinos and the markets. Usually they revolve around two styles, what you're suggesting here (buying whatever performed worst - selling whatever performs best) tends to be contrarian, betting more and more on something going down, hoping that it will eventually mean-revert (which does frequently happen), and then getting out gradually as it goes up, and turning a small profit from the fluctuation... It works, until a time comes that it doesn't mean-revert (or at least not for a long time) and all the small profits are wiped out in a long trending streak.
The other strategy tends towards momentum and catching a trend. This is not initially intuitive to most people at first, but streaks are actually much more likely to occur in small samples than people expect. The trend follower simply hopes to catch a streak of something going up and concentrate more and more into a focussed area as its going up, discarding the areas that aren't following the trend. With a strong trend, the growth compounds on growth exponentially with impressive results... until the trend changes and the chaser fails to detect the difference between a minor hiccup and a true change in the trend, and all their exponential growth turns into devastating losses.

In a zero-sum game both of these strategies will absolutely balance out to zero, but experience returns in vastly different ways. In a casino game with negative expected value both styles will ultimately lose.

In the stock market, you'll hear that it exhibits both momentum and mean-returning qualities, and depending on what time period you're looking at one or the other may be a preferable style (depending on if the ups and downs are frequent and choppy but ultimately flat, or if there is a strong trend in one direction)... but there is no way to know in advance what the future sequence of ups and downs will look like... The stock market does have positive expected value (unlike a casino), but that expected value does not come from guessing the the ups and downs or picking the right betting strategy. As tempting as it may be to game the market, playing the fluctuations just generates vigorish in the form of commissions and spreads for the croupiers that is the financial industry. This will ultimately hurt whatever positive expected value comes from the stock market holdings.
The source of the stock markets positive expected value is in the profits of the goods and services created by the businesses we own in it. Most of us do a lousy job of picking which businesses will do the best over a period of time, so we diversify broadly owning lots of businesses - perhaps representing the entire economy. Most of us do a lousy job of determining the proper price to buy a group of businesses with unknown futures, so we average in over time knowing that we'll average a fair price over time... And as long as business and capitalist enterprise succeeds, so will we.
I'm not sure if I'm getting my point across, but essentially I'm saying if you want to gamble on the sequence of ups and downs go to a casino. If you want to invest in the stock market, either focus on trying to determine the future value of business enterprises (and know that most people fail to beat the market at this), or set yourself up with a broadly diversified portfolio that matches your preferences and beliefs, and don't trade except to keep your risk-profile aligned with your goals.

...And yes, ultimately anyone investing in stocks hopes the upward trend never stops "Go buy-and-hold!", but we all know the short to intermediate term will certainly have lots of choppy and flat times "Go Rebalancing Bonus!".
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Posts: 920
Joined: Sat Feb 08, 2014 11:06 pm

Re: Callan periodic table of investment returns (quilt chart

Post by freddie » Thu May 01, 2014 8:28 pm

Take out cash and fixed income and replace with emerging markets and long term treasuries. If you don't you tend to end up with all your money in low performing assets during bull markets. Then only switch 1/3 of your money every year and distribute it between the 2 bottom (A diversity and momentum play) and I wouldn't be shocked to see returns that would put you in the top 10% of mutual funds over 10 years. Of course just owning total market gets pretty much the same results....

Posts: 1174
Joined: Wed May 09, 2012 10:21 pm

Re: Callan periodic table of investment returns (quilt chart

Post by HurdyGurdy » Fri May 02, 2014 3:20 pm

Additionally, to be buying and selling year after year would be very tax inefficient (outside of tax advantaged space).

User avatar
Taylor Larimore
Advisory Board
Posts: 28033
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

"Forget the needle. Buy the haystack."

Post by Taylor Larimore » Fri May 02, 2014 3:38 pm


To me, the Callan Table supports Mr. Bogle's thesis:
Forget the needle. Buy the haystack ... e=20130315

Best wishes.
"Simplicity is the master key to financial success." -- Jack Bogle

Posts: 1734
Joined: Tue Jul 23, 2013 1:45 pm

Re: "Forget the needle. Buy the haystack."

Post by island » Fri May 02, 2014 4:07 pm

Taylor Larimore wrote:schuyler74:

To me, the Callan Table supports Mr. Bogle's thesis:
Forget the needle. Buy the haystack ... e=20130315

Best wishes.
Great expression! My new investing motto.
Thanks for sharing.

User avatar
Topic Author
Posts: 232
Joined: Sat Apr 20, 2013 12:56 am

Re: "Forget the needle. Buy the haystack."

Post by schuyler74 » Fri May 02, 2014 5:11 pm

Forget the needle. Buy the haystack. ... e=20130315
Had to look up the context; pretty sure I've seen it on these forums in the past. Found it as #5 from http:// ... bogles-10-rules-of-investing :
  1. Remember reversion to the mean. What's hot today isn't likely to be hot tomorrow. The stock market reverts to fundamental returns over the long run. Don't follow the herd.
  2. Time is your friend, impulse is your enemy. Take advantage of compound interest and don't be captivated by the siren song of the market. That only seduces you into buying after stocks have soared and selling after they plunge.
  3. Buy right and hold tight. Once you set your asset allocation, stick to it no matter how greedy or scared you become.
  4. Have realistic expectations. You are unlikely to get rich quickly. Bogle thinks a 7.5 percent annual return for stocks and a 3.5 percent annual return for bonds is reasonable in the long-run.
  5. Forget the needle, buy the haystack. Buy the whole market and you can eliminate stock risk, style risk, and manager risk. Your odds of finding the next Apple (AAPL) are low.
  6. Minimize the "croupier's" take. Beating the stock market and the casino are both zero-sum games, before costs. You get what you don't pay for.
  7. There's no escaping risk. I've long searched for high returns without risk; despite the many claims that such investments exist, however, I haven't found it. And a money market may be the ultimate risk because it will likely lag inflation.
  8. Beware of fighting the last war. What worked in the recent past is not likely to work going forward. Investments that worked well in the first market plunge of the century failed miserably in the second plunge.
  9. Hedgehog beats the fox. Foxes represent the financial institutions that charge far too much for their artful, complicated advice. The hedgehog, which when threatened simply curls up into an impregnable spiny ball, represents the index fund with its "price-less" concept.
  10. Stay the course. The secret to investing is there is no secret. When you own the entire stock market through a broad stock index fund with an appropriate allocation to an all bond-market index fund, you have the optimal investment strategy. Discipline is best summed up by staying the course.

Posts: 1
Joined: Wed Dec 05, 2018 4:41 pm

Re: Callan periodic table of investment returns (quilt charts)

Post by ashcapone » Wed Dec 05, 2018 4:47 pm

Does anyone know how to create a customized quilt chart using MS Excel?

User avatar
Site Admin
Posts: 52850
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia

Re: Callan periodic table of investment returns (quilt charts)

Post by LadyGeek » Wed Dec 05, 2018 5:07 pm

Welcome! You are bumping a 2014 thread.

Please see the wiki: Callan periodic table of investment returns (Create your own periodic table - added after 2014).

A direct link to the discussion: Playing with Callan's periodic tables of investment returns
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Post Reply