Precious Metals Investment - Periodic Table of Returns
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The Periodic Table of Returns shows the best performing asset classes over the previous 15 years, from 1996 to 2010. A quick overview of the top bar reveals that year after year, no specific asset class outperforms another. Rather, the table illustrates the level of volatility in the markets over this time period. For example, in 1999 the EAFE Index occupied the top position, while Real Estate occupied the bottom position. The very next year, their positions were opposite. Similarly, in 2008 the Bond Index was the best performing asset, while the EAFE was the worst. In 2009, the EAFE Index was the second best and the Bond Index was the second worst. Also of note, rates of return vary from year to year. At the height of economic cycle in 2007, all 7 asset classes have positive returns, while in 2008, 5 of 7 assets posted negative returns.
The table underscores the importance of a well-diversified portfolio. Diversification can reduce the volatility of your assets as a whole by reducing your exposure to the risks associated with all investments. Since the long term price movements of every asset class are difficult to predict, the Periodic Table of Returns shows just how important it is to have a diversified portfolio of several different asset classes to increase the chances of profiting from your investments rather than taking a loss.
These returns are based on the year-end London PM fix. The precious metal allocation used is comprised of: 60% Gold, 30% Silver, 5% Platinum, 5% Palladium.
Real Estate measures the performance of Real Estate Investment Trust stocks traded on the NYSE, AMEX and NASDAQ.
The Russell 2000 Index measures the performance of small capitalization US stocks. The Russell 2000 is a market value weighted index of the 2,000 smallest stocks in the broad market Russell 3000 Index.
A Morgan Stanley Capital International Index, the MSCI EAFE is used for measuring the performances of stock markets in Europe, Australia, and East Asia.
This refers to the Barclays Capital Aggregate Bond Index. This index includes US government, corporate and mortgage-backed securities with maturities of at least one year.
The S&P 500 measures the performance of large capitalization stocks. The S&P 500 is a market value weighted Index of 500 stocks that are traded on the NYSE, AMEX and NASDAQ.
This index tracks the performance of the 3-month US Treasury market.