The problem with free beer is that I tend to have too much of it?.
IMO the historical average of a so-called balanced portfolio has only matched the rate of inflation over the same historical period—and that’s before taxes and fees.
How else could it be otherwise? We are talking about aggregate markets here, say the bond and currency markets. Individual assets might over- or under-perform, but the aggregate cannot, by definition, at least within a jurisdiction—which jurisdiction used to be a country, but which now could be considered a somewhat larger unit, in this era of sped-up connectedness.
To beat, you have to either play individuals, go outside the jurisdiction, or get in-and-out of a jurisdiction’s markets to capture the above-average periods while excluding the below-average ones. Tough to do, and takes work.
Long-range planning and investing is the biggest gamble there is. Who can know the future, even the shape of the future, 10, 20, 30 years in advance? Nobody. Even 5 years. Markets used to be understood as speculative, then a shift occurred...and now they are sold as minimally speculative. Buy and hold, we are told, by those chasing AUM.
A huge development has been US proxies for foreign investments.
Igy is criticized for always cherry-picking dates, but really, everybody does the same. I believe that control systems have been vastly enlarged and deepened, but control also permits abuse—and both lack of control and abuse can produce the same long-term results. Don’t fool yourselves, if you make out ok using industry-standard vehicles and strategy, you will have been lucky, not smart or savvy. There have been plenty of folks before you who felt just as comfortable and long-range certain as you do now, before the rug was pulled out from underneath them.
I am not advocating for trading furiously—all I want to say is to make sure you really are diversified, and understand that over time, you can never out-perform a system while operating within its limits.
