The Best & Worst Performing Asset Classes Over 10 Years
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What asset classes does the episode analyze from 2016–2025?
Hello and welcome to Friends That Invest. You're joined today by your host Sim. I'm a financial author and investor, and I'm here to help you learn about all things investing and personal finance. This week's episode is a fun one. I know I always say this about like every episode, but you know when you put like a lot of time and effort into something and you're like, wow, this is like, I'm so excited to speak on this. I came across essentially... a really interesting graph that showcased all the different asset classes over the last 10 years. And it allowed me to understand which asset classes did really well, which did really poorly. I put my little analysis hat on. I was like woman in STEM, except like woman in finance.
And you don't have to do all the hard work anymore. I have done it for you. And I've wrapped it up in a beautiful, quick, nice, easy episode so that you can be super smart and just be like, at the water cooler at work and be like, oh yeah, small caps didn't actually do that well in 2017. And everyone's going to be like, wow, Jess is so freaking smart. And she is. She just had to listen to a podcast to know all the information in really simple and easy terms. Now, before we get into it, if you had to guess the best performing asset class of the last 10 years, you probably would have said US stocks. And in all honesty, maybe for some of the years you would have been right. But when you look into it and pass the headlines, pass the assumptions that we have, when we look at the calendar year total returns from 2016 to 2025 across 11 major asset classes.
So this is large cap stocks. This is mid cap stocks. This is small cap stocks, growth stocks, value stocks, emerging market stocks, developed market stocks, gold, commodities, REITs and bonds. These are all the different asset classes.
Which asset classes were the top performers year-by-year across the decade?
And if I was to say to you, hey, investee bestie, what is the best performing asset class? You probably would have said large cap. And that has not always been the winner every single year. And in some years, it's been one of the worst performing asset class, which surprised me. So if you are wondering what is the best performing asset class by each year over the last 10 years, in 2016 was small cap. So companies that had very small market capitalizations, they grew very fast and they were up 27%. And 2017 was emerging markets. And emerging markets is like the fancy way of saying companies that have come from a country where the country is still developing and growing. But rather than calling it like a developing nation, that is not the correct way of saying it.
We like to say emerging markets because it's emerging. It's not developing. It's emerging. And that was up 31%, which was huge. Now, 2018 was a bad year because there was no asset class that made a positive return. And the only asset class that didn't make a negative return and therefore was the best performing asset class because everything else was like minus 5%, minus 10%, minus 20% was aggregate bonds. And aggregate bonds had a return of 0%. It's like when everyone else fails so badly in a test that you end up doing really well because everyone else was just so crap. It's not like you were very good, but like in comparison, you're like, oh, I got a 0%, but I am number one because everyone else got like minus 10.
That's what happened to aggregate bonds. So congratulations, aggregate bonds. Now, in 2019, a year before COVID, beautiful time, we had no idea what was coming, was value stocks. And value stocks were up 31%. And I just know Warren Buffett was like having the time of his life that year because value stocks are Warren Buffett's specialty. It's what he's known for. He says, you know, buy really good companies. at fair prices, see if there is some underlying value where the value, the intrinsic value of the company is lower than the market value, like what it's trading for. So he had a good year and I'm sure a lot of people thought, awesome, I'm going to invest in a lot of value stock and see what happens next year.
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Chapters
4 chapters
1
What asset classes does the episode analyze from 2016–2025?
0:04–1:49
2
Which asset classes were the top performers year-by-year across the decade?
1:49–11:29
3
Why was 2018 unique with aggregate bonds as the 'best' performer?
11:29–16:00
4
How did winners shift from value to growth to REITs between 2019–2021?
16:00–19:26
Speakers
1 identifiedMore from Friends That Invest
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