The Search for Non-Correlated Asset Classes

Distribution of Rolling 5 Year Correlations with S&P 500 1999-2014

 
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Source: Morningstar Direct, May 2014. Past performance is no guarantee of future results. Returns analyzed assume reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio.
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Will Returns Keep Pace with Inflation?

Inflation Risk
Source: DFA Returns 2.0. Past performance is no guarantee of future results. Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. Stocks are represented by the CRSP 1-10 Index; Bonds are represented by the Ibbotson/SBBI Long-Term Government Bonds Index; Inflation is represented by CPI. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio.
 
A couple of weeks ago we shared a chart illustrating how prices on goods have changed in the last 30 years due to inflation. Today, we’d like to share another way inflation can affect us—on our investment returns.
 
Very few of us have enough money today to pay for everything we will need in the future, especially when prices of goods and services rise by an average of 3% per year. Given that fact, we must invest our money with the goal of combatting that erosion of purchasing power that occurs over time.
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Investment Management is now Free

birdCage_freeIn the late 90’s I joined Schwab’s Electronic Brokerage (EB) division. Before I joined, EB was effectively a separate company (e.Schwab) with its own pricing, service structure and client base. It was designed for investors seeking to trade online and on the cheap – $29.95. You see, the discount brokerage side of Schwab still charged significantly higher prices for trading – upwards of $80. Then everything changed and Schwab offered flat $29.95 pricing across all business units.
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