Читать книгу Ignore the Hype - Brian Perry - Страница 27

One of the main goals of much of the financial industry is to provide you with guidance about what security, sector, or asset class will serve you best in the coming months and years. This has always been the case and it makes sense. Undoubtedly, in the years to come, some sectors of the stock market will do better than others. Perhaps technology stocks will lead the way. Or maybe energy stocks will produce the strongest returns. Or it could be consumer discretionary companies or consumer nondiscretionary companies. Although we don't know which of the sectors will perform the best, we do know that some will do better than others.

It's the same with asset classes. Perhaps small-company stocks will do better than large-company stocks over the next decade. Maybe commodities will outperform real estate.

Figure 2.2 shows the performance of several asset classes and portfolio mixes over a 20-year timeframe (1999–2018). As you can see, some investments have done better than others. The cumulative affect has been that investors in say, real estate investment trusts (REITs) have grown their wealth significantly beyond that of investors who purchased bonds (at least during the 20-year time frame measured in Figure 2.2).

Figure 2.2 Asset Class and Portfolio Performance (1999–2018)

SOURCE: Analysis by Brian Perry. Data from JP Morgan Asset Management & Dalbar Inc.

Consider that a $50,000 investment in REITs during that 20-year time frame would have grown to $330,311 while the same $50,000 invested in bonds would have turned into $120,585.

That, in one simple example, is why investors place so much focus on asset allocation, economic research, market forecasts, and the like. Picking the correct asset class, or mix of asset classes, can hold the key to financial success.

No wonder Wall Street churns out a constant parade of asset class forecasts!

No wonder the media talks breathlessly about the best or worst performing sectors!

Make no mistake: Buying the right sectors or asset classes can make an enormous difference in your investment returns and ultimately determine whether you achieve financial freedom.