Insights
&
Musings
The 2024 Periodic Table of Investment Returns
One of my favorite charts has always been the Callan Periodic Table of Investment Returns. This visual masterpiece is a powerful reminder of the unpredictability of financial markets and the critical importance of diversification.
The chart beautifully illustrates the annual performance of key asset classes from 2005 to 2024, showcasing how dramatically returns can shift from year to year. Just look at the wild swings - one year an asset class might be at the top of the chart, and the next, it could be languishing at the bottom.
What makes this chart truly special is how it demolishes the myth of consistently picking market winners. Emerging Market Equity, for instance, has seen returns ranging from a staggering 78.51% to a devastating -53.33%. It's a humbling visualization that underscores why a well-diversified portfolio is crucial for long-term investment success.
“It’s very difficult for any particular segment of the stock market to sustain superior performance. The watch word for our financial markets is, “reversion to the mean” i.e. what goes up must come down, and it’s true more often than you can imagine.”
The Callan Periodic Table isn't just a chart - it's a financial storyteller that reveals the inherent uncertainty in capital markets. It shows that no single asset class consistently dominates, which is why spreading your investments across different sectors and regions is so critical.
This chart is more than just numbers - it's a powerful tool for understanding market dynamics and making informed investment decisions. It's a reminder that successful investing is about patience, diversification, and avoiding the temptation to chase last year's top performers.
*Investing involves risk and you may incur a profit or loss regardless of strategy selected, including a long term holding period, diversification, and asset allocation. Raymond James is not affiliated with The Callan Institute.
Black Swans
I've had a number of clients who've expressed concerns about the markets and total economic calamity lately. I don't share these concerns but this post from the folks at Dimensional about how to avoid black swans says it better than I've been able to... https://www.dimensional.com/us-en/insights/how-to-avoid-black-swans
Aligning Your Spending with Your Values
Few people enjoy a budget and for many the goal of building wealth is so to get to the point that one isn’t needed. We’ve worked with clients at all ends of the wealth spectrum to help them evaluate their spending. Sometimes those with relatively smaller incomes are excellent savers and for some, the more they have, the easier it is to overspend.
Few people enjoy a budget and for many the goal of building wealth is so to get to the point that one isn’t needed. We’ve worked with clients at all ends of the wealth spectrum to help them evaluate their spending. Sometimes those with relatively smaller incomes are excellent savers and for some, the more they have, the easier it is to overspend.
Reining in Excess
Overspending can become a silent drain on wealth and personal fulfillment. If you find yourself in this situation, aligning your spending with your core values can be a powerful strategy to curb excess while enhancing your life’s purpose. So how can you transform your relationship with money from one of excess to one of meaningful impact?
Recognizing the Overspending Cycle
Overspending often stems from a disconnect between our actions and our intentions. It can be driven by:
Habit and convenience
Social pressures and expectations
Emotional triggers
Lack of clear financial goals
Desire for reaping the rewards after years of sacrifice.
The Cost of Misaligned Spending
Overspending doesn’t just affect your bank balance. It can lead to:
Diminished satisfaction with purchases
Increased stress and anxiety
Missed opportunities for meaningful impact
A legacy that doesn’t reflect your true self
Steps to Align Your Spending with Your Values
1. Confront Your Spending Reality
Begin by honestly assessing your spending habits. Look at your bank statements and credit card bills. Categorize your expenses and identify areas of excess.
2. Rediscover Your Core Values
Take time to reflect on what truly matters to you. Is it family, environmental sustainability, education, health, or personal growth? Your values should guide your financial decisions.
3. Identify the Gap
Compare your current spending patterns with your core values. Where are the biggest disconnects? This exercise often reveals surprising insights and opportunities for change.
4. Set Value-Based Financial Goals
Create specific, measurable goals that align with your values. For instance, if health is a priority, your goal might be to redirect funds from luxury purchases or travel to wellness investments.
5. Create a Values-Aligned Budget
Restructure your budget to prioritize spending in areas that align with what is most important to you. This might mean significantly reducing impulse purchases or redirecting funds to meaningful causes.
6. Implement a “Pause and Reflect” Practice
Before making any significant purchase, pause and ask yourself:
Does this align with my values?
Will this contribute to my long-term happiness and goals?
Is there a more meaningful way to use these funds?
Practical Strategies for High-Net-Worth Individuals
Quality Over Quantity: Focus on fewer, but more meaningful purchases.
Experiential Spending: Shift from material acquisitions to experiences that enrich your life and align with your values.
Strategic Philanthropy: Instead of impulse buying, redirect funds to causes you care about. This can provide a sense of purpose and impact.
Invest in Personal Growth: Allocate funds towards education, skills development, or wellness programs.
Sustainable Luxury: If luxury is important to you, opt for brands and services that align with ethical and sustainable practices.
Overcoming Challenges
Social Pressure: Develop strategies to resist peer pressure that leads to overspending. Surround yourself with like-minded individuals who respect your values.
Emotional Spending: Identify your emotional triggers for overspending and develop healthier coping mechanisms.
Habit Breaking: Replace ingrained spending habits with new routines that align with your values. This takes time and patience.
The Rewards of Aligned Spending
As you bring your spending in line with your values, you’re likely to experience:
Greater satisfaction with your purchases
A sense of control over your finances
Increased overall life satisfaction
The joy of making a meaningful impact
A legacy that truly reflects who you are
Conclusion
Overspending doesn’t have to be a permanent state. By aligning your spending with your core values, you can transform your relationship with money from one of excess to one of purpose and impact. This shift not only helps in curbing overspending but also ensures that your wealth becomes a powerful tool for living a more meaningful and fulfilling life. Remember, true wealth isn’t measured by how much you spend, but by the positive impact you create and the legacy you leave. Start today by examining one area of overspending and considering how you might redirect those funds in a way that aligns with your deepest values. Your future self – and the world around you – will thank you for it.
What To Do With A Lump Sum of Cash?
Statistically we know that investing a lump sum in equities beats dollar cost averaging 75% of the time. And we know that dollar cost averaging outperforms a buy the dip strategy 60 - 75% of the time. So it seems like a no brainer to go ahead and put that cash to work all at once. In volatile markets like these that can be a scary prospect though. Right now it seems like the economy and markets could easily get worse before they get better. The good news is you don’t have to choose among these three strategies. You can take a hybrid approach, which combines all three. We know that putting money to work and keeping it invested for the long haul is the most important step one can take towards building wealth, regardless of the exact timing of how you get started. So while statistics tell us that investing a lump sum all at once is a better strategy 75% of the time, it really hurts when you put a lump sum to work and then the markets crash, 20, 30, 40, or 50%! For many clients, they only have a large sum to put to work once or twice in their lives so the pressure feels much greater than a robotic approach to investing might suggest.
When it comes to investing cash you have 3 choices:
Invest it as a lump sum all at once
Average it in over time (dollar cost averaging)
Wait for a pullback (buy the dip) and invest it then
Statistically we know that investing a lump sum in equities beats dollar cost averaging 75% of the time. And we know that dollar cost averaging outperforms a buy the dip strategy 60 - 75% of the time. So it seems like a no brainer to go ahead and put that cash to work all at once. In volatile markets like these that can be a scary prospect though. Right now it seems like the economy and markets could easily get worse before they get better. The good news is you don’t have to choose among these three strategies. You can take a hybrid approach, which combines all three. We know that putting money to work and keeping it invested for the long haul is the most important step one can take towards building wealth, regardless of the exact timing of how you get started. So while statistics tell us that investing a lump sum all at once is a better strategy 75% of the time, it really hurts when you put a lump sum to work and then the markets crash, 20, 30, 40, or 50%! For many clients, they only have a large sum to put to work once or twice in their lives so the pressure feels much greater than a robotic approach to investing might suggest.
Rather than try to time the markets or live in fear of bad timing (unless you have an extremely strong stomach), for most clients, we would generally recommend utilizing a hybrid approach at times like these. Put some money to work as a lump sum. Then average in the remaining balance over 6 to 12 months, and accelerate those contributions for every additional 5% pullback from market highs. It’s a bit complex and requires a bit of extra effort on our part but it takes advantage of the best of all 3 strategies. There will be plenty of times when you wish you’d gone all in at once with a lump sum rather than a strategy like this but hindsight is 20/20 and more importantly a hybrid approach to putting money to work is one that most clients can feel comfortable committing to without fear of major short term regret.
The forgoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opions are those of Katherine Reisfeld and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.