The best we can say about last year’s Bridesmaid asset—the S&P 500—is that it did not underperform “the S&P 500.”
Asset Allocation in 2018 is about as bad as it gets. No major asset class has done well.
During 2018, no major asset class has done well, and in most respects the opportunity-set available this year has been among the worst in the last 50 years.
The concept of risk is hardly at the forefront of the investor psyche after the second-least volatile year in stock market history.
We are contrarians at heart, but learned quickly that successful contrarian investing is far more complicated than simply buying assets that are down the most in price.
U.S. 10-Year Treasury Bonds—last year’s Bridesmaid holding—eked out a 1% gain in 2016, a disappointing result but one that preserved a streak of positive annual returns dating back to 2001 (Table 2).