[wiki] Callan periodic table of investment returns

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[wiki] Callan periodic table of investment returns

Post by LadyGeek »

After skipping a year, the wiki has been revised to show the latest (version of the Callan periodic table of investment returns.

New investors, this is for you. The Callan table is the single best resource to show why diversification across asset classes (stocks vs. bonds) is the best approach for investing.

Comments / questions / corrections are welcome.

We have a similar thread: Callan Periodic Table Monthly Edition - Contribution/Rebalancing Frequency?, but it's focused on monthly returns.

(Yes, I did receive permission from Callan to reproduce the chart.)
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Re: [wiki] Callan periodic table of investment returns

Post by Stinky »

The variability in year-by-year returns is fascinating.

For example, "Emerging market equity" had the highest number of years in first place - 5 years out of the 20 years studied. It also had the second highest number of years in last place - 4 years out of 19 studied. (Only "Cash Equivalents" had more years in last place).
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Re: [wiki] Callan periodic table of investment returns

Post by l1am »

So... I should hold REITs?
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Re: [wiki] Callan periodic table of investment returns

Post by Kookaburra »

LadyGeek wrote: Sat Jan 16, 2021 5:07 pm After skipping a year, the wiki has been revised to show the latest (version of the Callan periodic table of investment returns.

New investors, this is for you. The Callan table is the single best resource to show why diversification across asset classes (stocks vs. bonds) is the best approach for investing.

Comments / questions / corrections are welcome.

We have a similar thread: Callan Periodic Table Monthly Edition - Contribution/Rebalancing Frequency?, but it's focused on monthly returns.

(Yes, I did receive permission from Callan to reproduce the chart.)
When I follow the link to the wiki, and click on the chart, it only goes through 2019. Has it been updated through 2020 yet?
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Re: [wiki] Callan periodic table of investment returns

Post by MindTheGAAP »

Kookaburra wrote: Tue Jan 19, 2021 12:17 am When I follow the link to the wiki, and click on the chart, it only goes through 2019. Has it been updated through 2020 yet?
Same issue here.
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Re: [wiki] Callan periodic table of investment returns

Post by 000 »

Every time I look at the Callan table I wonder what conclusion to draw.
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Re: [wiki] Callan periodic table of investment returns

Post by Makaveli »

MindTheGAAP wrote: Tue Jan 19, 2021 12:27 am
Kookaburra wrote: Tue Jan 19, 2021 12:17 am When I follow the link to the wiki, and click on the chart, it only goes through 2019. Has it been updated through 2020 yet?
Same issue here.
+2
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Re: [wiki] Callan periodic table of investment returns

Post by siamond »

I updated the spreadsheet which was developed in 2018 to assemble custom periodic tables. This includes 2020 returns.

Discussion thread: viewtopic.php?f=10&t=257653

Download instructions: viewtopic.php?f=10&t=257653&p=4098254#p4098373
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Re: [wiki] Callan periodic table of investment returns

Post by Brianmcg321 »

000 wrote: Tue Jan 19, 2021 3:41 am Every time I look at the Callan table I wonder what conclusion to draw.
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Re: [wiki] Callan periodic table of investment returns

Post by Brianmcg321 »

siamond wrote: Tue Jan 19, 2021 9:06 am I updated the spreadsheet which was developed in 2018 to assemble custom periodic tables. This includes 2020 returns.

Discussion thread: viewtopic.php?f=10&t=257653

Download instructions: viewtopic.php?f=10&t=257653&p=4098254#p4098373
Love that thread.
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
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Re: [wiki] Callan periodic table of investment returns

Post by Laurizas »

willthrill81 wrote: Tue Jan 19, 2021 11:26 am It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information.
Could you explain in simple words?
willthrill81 wrote: Tue Jan 19, 2021 11:26 am. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
Conclusions like what?
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Re: [wiki] Callan periodic table of investment returns

Post by Tamalak »

willthrill81 wrote: Tue Jan 19, 2021 11:26 am I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
This.. the callan table appears intended to confuse and intimidate rather than clarify or communicate.
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

Laurizas wrote: Tue Jan 19, 2021 11:32 am
willthrill81 wrote: Tue Jan 19, 2021 11:26 am It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information.
Could you explain in simple words?
There are four levels of measurement with data: nominal, ordinal, interval, and ratio.

Nominal data only uses numbers as labels, like telephone numbers and players' numbers in sports. Letters could just as easily be used.

Ordinal data are ranked in some way. The order in which racers finish is an example.

Interval data are measured using a scale where the points on the scale are placed at an equal distance from one another (e.g., the distance between '3' and '4' is the same as the distance between '4' and '5'). Temperature scales like Fahrenheit and Celsius (aka Centigrade) use an interval scale.

Ratio data contain all of the properties of interval data but also have a zero point that indicates the complete absence of what's being measured. Measures of weight use ratio data.

Now let's move to the problem of converting ratio data to ordinal data using the example of college football teams, where the top 25 are ranked. If we assume that these rankings are accurate, it means that the team ranked 19th should be better than the 20th ranked player, for instance. But it doesn't tell us how much better the 19th ranked team is than the 20th ranked team (or the 21st, 22nd, etc.). It could be that there is a big gap in the quality of the 19th ranked team and the 20th ranked team but only a tiny gap between the 18th and 19th ranked teams.

Using a different analogy, if two horses in a race finish within .1 second of each other, but the third horse finishes 3 seconds later, using only the order in which the horses finished the race (i.e. ordinal data) obscures this very meaningful difference in relative performance that ratio data (i.e. the time it took each horse to finish the race) makes clearly evident.

The Callan table takes ratio data (i.e., returns from various asset classes) and ranks them in order of lowest to highest returns by calendar year, thereby converting them to ordinal data. If we see that one asset class outperformed another in a given year, the color coding scheme doesn't tell us how much better its outperformance was.
Laurizas wrote: Tue Jan 19, 2021 11:32 am
willthrill81 wrote: Tue Jan 19, 2021 11:26 am. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
Conclusions like what?
An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth. For instance, the Callan table linked in the OP shows U.S. fixed income as being among the top 4 ranked asset classes in 9 of the 20 years displayed, which looks pretty good. By comparison, large-cap U.S. equity was only in the top 4 ranked asset classes in 8 of the 20 years. This could easily lead someone to believe that fixed income outperformed large-cap equity, but that's false. Average annualized real returns of TBM were 2.78%, while large-cap stocks returned 4.31%. And small-cap stocks, which were among the top 4 ranked asset classes in the same number of years as fixed income, outperformed both fixed income and large-cap stocks by a big margin with 6.67% annualized real returns. Such important distinctions are completely lost when we're only looking at ordinal data for individual years.

Further, why should individual years' performance matter much at all to investors? As Paul Merriman has said, 'a year's performance of anything is just noise'. By my way of thinking, investors should be thinking in much longer terms, at least a decade at a time.
Last edited by willthrill81 on Sat Jan 23, 2021 11:10 am, edited 1 time in total.
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Re: [wiki] Callan periodic table of investment returns

Post by H-Town »

willthrill81 wrote: Tue Jan 19, 2021 11:26 am I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
While some users want to use Callan table to interpret the performance of various classes, I use this table as a visual to illustrate the benefit of diversification for buy-and-hold investors. For this group of investors, they don't need to guess which asset class will be the winner in any given year. They just need to construct a diversified, broad market indexed funds. It's one of the basis for the Bogleheads' 3-Fund portfolio:
1) Total U.S. stocks
2) Total International stocks
3) Total Bond fund
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

H-Town wrote: Tue Jan 19, 2021 12:21 pm
willthrill81 wrote: Tue Jan 19, 2021 11:26 am I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
While some users want to use Callan table to interpret the performance of various classes, I use this table as a visual to illustrate the benefit of diversification for buy-and-hold investors. For this group of investors, they don't need to guess which asset class will be the winner in any given year. They just need to construct a diversified, broad market indexed funds. It's one of the basis for the Bogleheads' 3-Fund portfolio:
1) Total U.S. stocks
2) Total International stocks
3) Total Bond fund
The problem is that the 3-fund portfolio isn't very diversified in terms of returns or performance at all. Market beta is by far the biggest driver of the 3-fund portfolio's performance (unless it is tilted very heavily toward bonds). The start-date sensitivity, which is inversely related to a portfolio's diversification, of the 3-fund portfolio over the last 50 years has been among the highest of any 'expert crafted' portfolio in existence, as noted in this recent thread.
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Re: [wiki] Callan periodic table of investment returns

Post by CABob »

l1am wrote: Tue Jan 19, 2021 12:03 am So... I should hold REITs?
YES in 2006, 2012, and 2014
NO in 2007, 2008, and 2011

:twisted:
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Re: [wiki] Callan periodic table of investment returns

Post by Soon2BXProgrammer »

CABob wrote: Tue Jan 19, 2021 1:27 pm
l1am wrote: Tue Jan 19, 2021 12:03 am So... I should hold REITs?
YES in 2006, 2012, and 2014
NO in 2007, 2008, and 2011

:twisted:
Bahahhahahaha.... can you give me a forecast for the next 10 years, the top returning asset class by year?
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Re: [wiki] Callan periodic table of investment returns

Post by FIREchief »

000 wrote: Tue Jan 19, 2021 3:41 am Every time I look at the Callan table I wonder what conclusion to draw.
That's the thing. Different people can look at the same chart and draw different conclusions. It's like that optical illusion drawing where some people see an old woman and some see a young woman.

https://www.livescience.com/63645-optic ... woman.html

I think the table is over-hyped as a reason to diversify into all asset classes. It guarantees that a person will hold both the winner and loser in each and every year. Specific years don't matter to me. I'm a long term, buy and hold investor. When I look at that table it reinforces my decision to just own US TMI and nothing else. Once in a while it will be the "winner," it will also sometimes be the "loser." But, over time, it is middle of the road which is all I need. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Re: [wiki] Callan periodic table of investment returns

Post by TravelGeek »

Maybe I am mis-interpreting the intention behind the table, but for me it is just an educational tool to visualize “at a glance” that the relative performance of individual asset classes varies widely over time and that there is no obvious discernible pattern. The end.
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Re: [wiki] Callan periodic table of investment returns

Post by LadyGeek »

Kookaburra wrote: Tue Jan 19, 2021 12:17 am When I follow the link to the wiki, and click on the chart, it only goes through 2019. Has it been updated through 2020 yet?
I updated the wiki on January 16, 2021, but the 2019 table was the latest available.

Now I see the 2020 table on their website (updated January 15, 2021), but the website won't let me download the PDF. I have a Callan account and access to the PDF, but the "Download" button isn't working. I emailed Callan for assistance.

Update: There was a problem with the file on their end. It's fixed. Wiki update in progress.
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Re: [wiki] Callan periodic table of investment returns

Post by LadyGeek »

^^^ Done. The wiki has been updated for 2020. See: Callan periodic table of investment returns

This includes both the table (image) and supporting spreadsheets.

I chose real estate to show the year-to-year comparison. It went from 4th (2019) to 9th (2020) - last place.

Heads up: Callan support informed me that you'll soon need a login account to download the file.

I think they have some browser issues, as I was only able to download the file in Windows using Microsoft Edge and logged into my account. With different browsers (Chrome and Firefox), I got to the "Download" button and nothing after that, no error message. I let them know - they'll look into it.
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Re: [wiki] Callan periodic table of investment returns

Post by firebirdparts »

TravelGeek wrote: Tue Jan 19, 2021 2:15 pm Maybe I am mis-interpreting the intention behind the table, but for me it is just an educational tool to visualize “at a glance” that the relative performance of individual asset classes varies widely over time and that there is no obvious discernible pattern. The end.
That's what I thought too.

I think it would be crazy to take more than that from it. Just look at the actual numbers.
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Re: [wiki] Callan periodic table of investment returns

Post by TravelGeek »

LadyGeek wrote: Tue Jan 19, 2021 4:25 pm ^^^ Done. The wiki has been updated for 2020. See: Callan periodic table of investment returns
FWIW, my browser (Safari/iPad) chose to cache the previous image, so when I accessed the page it still showed me the previous image that ended in 2019.
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Re: [wiki] Callan periodic table of investment returns

Post by LadyGeek »

Hopefully, you've fixed it by refreshing the page should fix that.

Clicking on the table (image) link brings you to: File:Callan Periodic Table of Investment Returns.png

Note that all of the previous tables are on that page. When the table is updated, I think your browser sees the same link and doesn't know that the page needs to be refreshed. Hence, the need to refresh your browser.

(I cleared the wiki's built-in cache for that page, so it's refreshed from the wiki side of the fence.)
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Re: [wiki] Callan periodic table of investment returns

Post by jaybee9 »

Brianmcg321 wrote: Tue Jan 19, 2021 10:19 am
000 wrote: Tue Jan 19, 2021 3:41 am Every time I look at the Callan table I wonder what conclusion to draw.
Nobody knows nuthin’
Using cash alone is probably not going to help me achieve my goals
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Re: [wiki] Callan periodic table of investment returns

Post by jaybee9 »

willthrill81 wrote: Tue Jan 19, 2021 12:32 pm
H-Town wrote: Tue Jan 19, 2021 12:21 pm
willthrill81 wrote: Tue Jan 19, 2021 11:26 am I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
While some users want to use Callan table to interpret the performance of various classes, I use this table as a visual to illustrate the benefit of diversification for buy-and-hold investors. For this group of investors, they don't need to guess which asset class will be the winner in any given year. They just need to construct a diversified, broad market indexed funds. It's one of the basis for the Bogleheads' 3-Fund portfolio:
1) Total U.S. stocks
2) Total International stocks
3) Total Bond fund
The problem is that the 3-fund portfolio isn't very diversified in terms of returns or performance at all. Market beta is by far the biggest driver of the 3-fund portfolio's performance (unless it is tilted very heavily toward bonds). The start-date sensitivity, which is inversely related to a portfolio's diversification, of the 3-fund portfolio over the last 50 years has been among the highest of any 'expert crafted' portfolio in existence, as noted in this recent thread.
+1. I started investing in Vanguard S&P 500 right before the lost decade (the naughts) and it was tough to literally watch it go nowhere for a long time. This table and tools over at portfoliocharts suggest to me that some carefully added asset classes could help improve my portfolio.
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Re: [wiki] Callan periodic table of investment returns

Post by Dottie57 »

TravelGeek wrote: Tue Jan 19, 2021 2:15 pm Maybe I am mis-interpreting the intention behind the table, but for me it is just an educational tool to visualize “at a glance” that the relative performance of individual asset classes varies widely over time and that there is no obvious discernible pattern. The end.
This.

I never changed my asset allocation or moved into factors. I did see this the chart as evidence against using an FA.
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

jaybee9 wrote: Tue Jan 19, 2021 7:35 pm
willthrill81 wrote: Tue Jan 19, 2021 12:32 pm
H-Town wrote: Tue Jan 19, 2021 12:21 pm
willthrill81 wrote: Tue Jan 19, 2021 11:26 am I suppose that I'm one of the few around here that doesn't like the Callan table at all. It condenses ratio data, which carry the most information of any type of data, to ordinal data, which conveys far less information. And I'm not aware of any compelling reason for why this valuable information should be removed. At the very least, the table can lead investors to erroneous conclusions about the performance of various asset classes.
While some users want to use Callan table to interpret the performance of various classes, I use this table as a visual to illustrate the benefit of diversification for buy-and-hold investors. For this group of investors, they don't need to guess which asset class will be the winner in any given year. They just need to construct a diversified, broad market indexed funds. It's one of the basis for the Bogleheads' 3-Fund portfolio:
1) Total U.S. stocks
2) Total International stocks
3) Total Bond fund
The problem is that the 3-fund portfolio isn't very diversified in terms of returns or performance at all. Market beta is by far the biggest driver of the 3-fund portfolio's performance (unless it is tilted very heavily toward bonds). The start-date sensitivity, which is inversely related to a portfolio's diversification, of the 3-fund portfolio over the last 50 years has been among the highest of any 'expert crafted' portfolio in existence, as noted in this recent thread.
+1. I started investing in Vanguard S&P 500 right before the lost decade (the naughts) and it was tough to literally watch it go nowhere for a long time. This table and tools over at portfoliocharts suggest to me that some carefully added asset classes could help improve my portfolio.
Lately, many here, including at least one prominent poster, has been saying something to the effect of 'SCV has been underperforming TSM for a couple of years now, so you should bail on it and go with the three-fund portfolio!' But SCV has still had robustly positive results. Compare that to 2000-2009, when TSM returned -2.7% annualized and SCV (as measured by VISVX) returned +5% real. Which one would have been easier to bail on, TSM when it was negative for a decade or SCV when it was positive but lagged TSM for a couple of years?

Rather than putting so much effort into trying to dissuade people from factor-tilting, I think that the aforementioned posters could do more good trying to persuade people to not bail on their allocations, whatever they are, when they have negative returns for years on end. That's a much bigger risk IMHO.
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Re: [wiki] Callan periodic table of investment returns

Post by Laurizas »

willthrill81 wrote: Tue Jan 19, 2021 12:14 pm An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth.
willthrill81, thank you very much for a detailed explanation. I never have before dived deeper into Callan's periodic table though I studied it a little bit and I had a feeling that I am missing something.
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

Laurizas wrote: Wed Jan 20, 2021 2:15 am
willthrill81 wrote: Tue Jan 19, 2021 12:14 pm An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth.
willthrill81, thank you very much for a detailed explanation. I never have before dived deeper into Callan's periodic table though I studied it a little bit and I had a feeling that I am missing something.
No problem. :beer

It's difficult enough for most investors, yours truly included, to wrap their minds about the actual returns of various asset classes over time without removing valuable information just to make it more visually appealing (and likely designed in such a way as to lead investors to a specific conclusion). And even more than that, investors should be much more concerned about their portfolios' performance over the long-term, not the short-term performance of individual components of their portfolio.
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Callan Chart for 2001-2020 is now out

Post by oldcomputerguy »

[I merged my post with LadyGeek's previous thread. -- mod oldcomputerguy]

The latest edition of the Callan Periodic Chart of Investment Returns has been released, covering years from 2001 to 2020. Small-cap tops the return chart at 19.96%, while Real Estate came in last place at -9.04%. A PDF of the chart can be downloaded at https://www.callan.com/research/2020-cl ... dic-table/
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Re: Callan Chart for 2001-2020 is now out

Post by JupiterJones »

And ace moderator LadyGeek has already updated the wiki a few days ago:

viewtopic.php?t=336650&p=5746282

:sharebeer
Stay on target...
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Re: Callan Chart for 2001-2020 is now out

Post by Peculiar_Investor »

JupiterJones wrote: Wed Jan 20, 2021 11:50 am And ace moderator LadyGeek has already updated the wiki a few days ago:
She might have had some prompting. :D
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Re: [wiki] Callan periodic table of investment returns

Post by bling »

the table is useful to drive the point home that nobody knows nothing and you can't predict the future. the problem is that all the boxes are equal in size, so visually it's misleading. perhaps a better representation would be to have the size of the boxes proportional to the returns so that a 10% return box is 10x bigger than the 1% return box.
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Re: Callan Chart for 2001-2020 is now out

Post by Normchad »

I love the Callan periodic table.

A couple of observations:
1. Large cap equity has been in the top 3 for 6 of the last 7 years
2. What happened in 2015? I don’t remember that being a bad year.....
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Re: [wiki] Callan periodic table of investment returns

Post by F150HD »

I find it interesting to look at, esp at how some classes performed when the economy was crumbling (like 2008)
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tooluser
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Re: [wiki] Callan periodic table of investment returns

Post by tooluser »

So what would a most useful "periodic table" look like?

Maybe it's a hypercube?
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

tooluser wrote: Wed Jan 20, 2021 11:59 pm So what would a most useful "periodic table" look like?

Maybe it's a hypercube?
An old-fashioned graph using a logarithmic scale, which Portfolio Visualizer does as a default, is pretty hard to beat, IMHO.
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Re: [wiki] Callan periodic table of investment returns

Post by JupiterJones »

tooluser wrote: Wed Jan 20, 2021 11:59 pm So what would a most useful "periodic table" look like?
I feel like the point the table is trying to make might be clearer if it were a bump chart.
Stay on target...
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Re: [wiki] Callan periodic table of investment returns

Post by siamond »

tooluser wrote: Wed Jan 20, 2021 11:59 pm So what would a most useful "periodic table" look like?

Maybe it's a hypercube?
I made a few attempts in this thread. One variant is to allow each cell to represent the CAGR of a time period (e.g. 5 years, 10 years, whatever) instead of a single year, see an example here. Another variant is to position the squares relative to a 0% absolute return, see an example here. Those are useful improvements, I think, but it doesn't really fix the core issue...

The real fix is to ditch periodic tables and look at Telltale charts anchored on a sensible benchmark, which capture both short-term dynamics and long-term dynamics. But then it takes some efforts to interpret it. The beauty of a Callan chart is that it gives an intuitive message to everybody about short-term dynamics in just one glance. The problem of such a chart is that whenever you dig a tad further, you [should] realize that interpretation gets strongly distorted by lacking any sense of amplitude and any sense of long-term dynamics. I don't think the chart can be 'fixed'. It just should be positioned for what it is, a simple (and overly simplistic) message about short-term dynamics and diversification.
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Re: [wiki] Callan periodic table of investment returns

Post by jsprag »

willthrill81 wrote: Tue Jan 19, 2021 12:14 pm An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth.
This is such an important point that I thought it was worth reinforcing with a chart of year-end cumulative results based on numbers in the Callan table.

Image
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Re: [wiki] Callan periodic table of investment returns

Post by siamond »

LadyGeek wrote: Sat Jan 16, 2021 5:07 pm After skipping a year, the wiki has been revised to show the latest (version of the Callan periodic table of investment returns.

New investors, this is for you. The Callan table is the single best resource to show why diversification across asset classes (stocks vs. bonds) is the best approach for investing.

Comments / questions / corrections are welcome.
Ladygeek, I would suggest to include such growth chart in the 'Putting the table into perspective' section of the wiki page (perhaps replacing the table of statistics and simply provide a link to the latter)... And I will do something similar in my 'periodic table' little spreadsheet.
jsprag wrote: Sat Jan 23, 2021 9:07 am
willthrill81 wrote: Tue Jan 19, 2021 12:14 pm An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth.
This is such an important point that I thought it was worth reinforcing with a chart of year-end cumulative results based on numbers in the Callan table.

Image
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Re: [wiki] Callan periodic table of investment returns

Post by willthrill81 »

siamond wrote: Sat Jan 23, 2021 9:28 am
LadyGeek wrote: Sat Jan 16, 2021 5:07 pm After skipping a year, the wiki has been revised to show the latest (version of the Callan periodic table of investment returns.

New investors, this is for you. The Callan table is the single best resource to show why diversification across asset classes (stocks vs. bonds) is the best approach for investing.

Comments / questions / corrections are welcome.
Ladygeek, I would suggest to include such growth chart in the 'Putting the table into perspective' section of the wiki page (perhaps replacing the table of statistics and simply provide a link to the latter)... And I will do something similar in my 'periodic table' little spreadsheet.
jsprag wrote: Sat Jan 23, 2021 9:07 am
willthrill81 wrote: Tue Jan 19, 2021 12:14 pm An individual looking at the table could easily conclude, as some in this thread clearly have, that the seemingly random year-to-year ranked returns of the asset classes means that they have all had similar cumulative returns over the long-term, when nothing could be further from the truth.
This is such an important point that I thought it was worth reinforcing with a chart of year-end cumulative results based on numbers in the Callan table.

Image
I think that's an excellent idea. :thumbsup
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Re: [wiki] Callan periodic table of investment returns

Post by siamond »

willthrill81 wrote: Sat Jan 23, 2021 10:54 am I think that's an excellent idea. :thumbsup
Me too! :D

More seriously, as I was tweaking my own periodic table spreadsheet, I started to reflect on the fact that a growth chart is a good way to put a periodic table in perspective, but also... a periodic table is a good way to put a growth chart in perspective! Both representations have significant pros & cons and seeing them together might be a case of 1+1 = 3.
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Re: [wiki] Callan periodic table of investment returns

Post by LadyGeek »

I disagree on a Growth of 10k chart because it gives the wrong impression that Emerging Market Equity is what you should be investing in (if you started in 2001). What happens when you start investing in other years, such as 2007?

Instead, how about the "Growth of Capital" chart that's in the "Callan Periodic Table 2019: Statistics" spreadsheet, select the growth of capital chart tab (last one on the right)?

Here's a direct link: Callan Periodic Table 2019: Statistics - growth of capital chart

I'm just one opinion and will go with the consensus. How about both?
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Re: [wiki] Callan periodic table of investment returns

Post by Noobvestor »

Editing this to delete a mistaken critique - I thought the graph data was wrong, in short. Apologies for confusing the issue.
Last edited by Noobvestor on Mon Jan 25, 2021 2:21 pm, edited 1 time in total.
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Re: [wiki] Callan periodic table of investment returns

Post by siamond »

LadyGeek wrote: Sat Jan 23, 2021 11:57 am I disagree on a Growth of 10k chart because it gives the wrong impression that Emerging Market Equity is what you should be investing in (if you started in 2001). What happens when you start investing in other years, such as 2007?

Instead, how about the "Growth of Capital" chart that's in the "Callan Periodic Table 2019: Statistics" spreadsheet, select the growth of capital chart tab (last one on the right)?

Here's a direct link: Callan Periodic Table 2019: Statistics - growth of capital chart

I'm just one opinion and will go with the consensus. How about both?
We could include both charts, why not, although it might get a little busy. The capital growth chart (well, that's a misleading title, it's really a CAGR chart) improves a bit on periodic tables because it shows amplitude and it shows absolute numbers, but this still totally misses the cumulative effect of returns over a period of time. Which a growth chart captures well and is crucial information to any investor. For sure, growth charts have their own issues (overly sensitive to start/end point), but if we were to censor charts because of their deficiencies, we shouldn't show periodic tables in the first place... This was my entire point, actually, seeing BOTH Periodic table and Growth chart would allow people to think a bit deeper and question hasty conclusions.

PS. I am actually warming up to the idea of showing the two types of charts (CAGR and Growth) to put periodic tables in perspective. I just realized that the 'dispersion of returns' chart is essentially an overly simplified version of a CAGR chart. Maybe just drop the dispersion chart and include both CAGR and Growth charts.
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Re: [wiki] Callan periodic table of investment returns

Post by clip651 »

The growth of 10,000 chart is a good visual, but it picks a single start point, which isn't how most people invest when they are starting out. And no new investor can go back to that start point. A different start point would look different, and we don't know what the future holds, so it would be potentially misleading to new investors.

It would be nice if there was a way to show graphically the returns of each asset class by year. For a single asset class, a bar graph, with returns on the Y axis and years on the X axis would work, with 0 return at the origin, so it's easy to see negative returns as well as positive. But I'm struggling with a simple way to show it for many asset classes. You can build a multiseries bar chart, but it would get pretty busy with a lot of different asset classes.

When I was a new investor (and I'm still not that many years in) the simple message of the Callan table for me was to show how much things vary year to year, and how little one year looked like the next. It was also eye opening to read the numbers on the table and realize that sometimes even 4th place could be -25% or so (see 2008). That was worse than the worst performing asset class from the year before! I wish the negative numbers were more obvious on the Callan table.
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Re: [wiki] Callan periodic table of investment returns

Post by clip651 »

I missed the growth of capital chart LadyGeek linked above - that does something like what I was trying to describe with my multiseries bar idea. The lines are probably clearer and simpler to read than a bunch of bars.
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