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The periodic table of investment returns

Posted on February 2, 2007 by Richard Beddard
Filed Under Investing |

The periodic table of investment returnsThis table from Callan Associates, an investment consultancy, demonstrates that no one category of share is superior to any other in the long-term. It ranks the performance of indices representing the S&P500, growth stocks, value stocks, small companies, large companies, international stocks, and bonds since 1987.

Value shares have done better than growth shares for a long time. Seven years, according to the table. But in the six years before that growth shares did better, especially if they were in larger companies. When growth shares will return to favour is difficult to predict. But the evidence is mounting that they will, one day.

A couple of footnotes:

  1. I first came across the periodic table by way of The Intelligent Investor, by Benjamin Graham. It’s perhaps the classic value investing text, but, though it’s heresy to say it, I think The Intelligent Investor is showing its age. Perhaps that’s why, in its modern edition, the publisher packages the original book with a commentary by Jason Zweig. Unless you’re a diligent student, reading it now is a bit like skimming the set text and relying on Cole’s Notes for your english literature examination. Mr Zweig’s commentary is a very good read. It’s full of references like the one to the periodic table of investment returns.
  2. My earlier post, The fundamental flaw in value investing, attracted the attention of Value Investing News. In fact it’s still number five on their ‘top story‘ list - as voted by the site’s community of value investors. There are some interesting comments there too.
Category: Investing

Comments

4 Responses to “The periodic table of investment returns”

  1. dave on February 12th, 2007 2:12 pm

    Is there a growth tracker / etf for the UK indexes?

    I know of the UK dividend plus ETF that is considered a value tracker, but is there anything similar for growth?

  2. Richard Beddard on February 13th, 2007 12:27 pm

    Hi Dave. Very nice to hear from you. I haven’t researched this exhaustively, but I don’t know of one.

    iShares do a European Growth ETF (that excludes the UK). Its ticker is IDJG. Ceri Jones, one of our writers, surveyed the US options here: http://personalfinance.iii.co.uk/articles/articledisplay.jsp?article_id=5713934&section=Markets

    Good luck, and if you find what you are looking for, let me know :-)

  3. The Interpretation of Financial Statements | Interactive Investor Blog on April 23rd, 2007 1:33 pm

    [...] I like “The Intelligent Investor”, also by Benjamin Graham. [...]

  4. The Intelligent Investor | Interactive Investor Blog on June 4th, 2007 5:39 pm

    [...] You can’t read it (safely) in the bath, and it doesn’t include Jason Zweig’s excellent notes (included in the latest edition). But it’s [...]

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