You Don't Need Perfect Knowledge To Invest Well
To be clear, to get that 29.9% return every year from 2002 through 2016, you would have had to invest 100% of your portfolio in the No. 1% asset class on January 1 and held it until the end of the year, and then bought the coming year's leader. The yellow boxes highlight the No. 1 asset classes in each of those 15 years. On January 1, 2003, you would have had to choose which one of the 12 types of investments would be No. 1 again, and you would have had to do that annually for 15 years to average 30% return.
It's obviously totally unrealistic to have expected this. It would take a miracle to pull this off!
This approach to investing is grounded in a large body of academic research developed over the past 70 years, generally called "modern portfolio theory." It's an approach we believe has merit, and it is very different from trying to predict the future or picking next year's No. 1 performer.
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