Since 1973, investors would have gotten a 10.2 percent annualized return if they had a portfolio that split evenly each year across commodities, large U.S. stocks, small U.S. stocks, real-estate investment trusts, 10-year Treasurys, gold and foreign developed-market stocks. That’s nearly as big a return as the S&P 500 itself, at 10.4 percent, with significantly less volatility.
I need to verify that quote, but that is fairly remarkable statement considering it’s a pretty easy to implement strategy. I threw the numbers in this site, and didn’t get quite what I thought:
You can muck around with these numbers, and you get some interesting results, but this portfolio does seem to do better than most over various time periods. Gold’s effect seems to be the most pronounced. Taking gold out of the equation and shifting it to commodities basically ruins any gains. Is gold really still not correlated with the market as an asset (looking at other precious metals funds, you get similar results but with much worse draw downs). This is all anecdotal I pick random periods and random portfolios.
I would need to do much more analysis to see how this really performs. This site really goes to show how much timing enters in the equation as you can pick years of entry and see massive changes. Need to spend more time with this. Rolling returns is pretty awesome…