If the last decade has taught investors anything, it is that taking greater risk does not always result in greater return. An investor who put his entire portfolio in a basket of developed-world equity markets at year-end 1999 would have earned all of 2.34% over 10 years. And to earn that 2%, this investor would have endured two of the worst bear markets in history, with peak-to-trough declines of 45% and 53%. What’s more, an investment in conservative full-faith-and-credit-pledge short-term U.S. Treasuries was up 55% over the last 10 years.
The 2000s were without a doubt a dismal decade for equity-only investors. Investors excluding bonds from their portfolios are making a grave mistake.
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- The Economy Hasn’t Done this in Over a Decade - December 15, 2017
- Is the Fed the Biggest Risk to the Economy? - December 14, 2017
- Household Net Worth Hits a Record High: Is that a Good Thing? - December 13, 2017