Tag: volatility
An Investment Tolerancy Chart
by dd on Nov.03, 2008, under index funds, volatility
Here’s a chart that shows what certain asset groups have done over the same time period in the face of nearly a 43% loss in the Dow Jones (since its peak of around 14,100 to a low of about 8,175). Dividend reinvestments are not included. Also, some of the other indices have swung more over a different period of time because they are not 100% correlated to the Dow Jones index.
The point of this chart is to think about the loss tolerance one can take. Individual stocks and bonds can lose even more than 43%. I believe most people cannot stomach the stock loss, though they like the gains.
I tried to pick broad asset classes. I left out foreign stock investing because they are more volatile than the U.S.
| Oct 9 | Oct 27 | %loss | Index name | |
| 2007 | 2008 | |||
| VNQ | 76.08 | 33.19 | -56.4% | Vanguard REIT index |
| SPY | 156.48 | 83.95 | -46.3% | S&P 500 index |
| NASDAQ | 2803 | 1506 | -46.3% | NASDAQ composite |
| DJI | 14,164 | 8,175 | -42.3% | Dow Jones Industrials |
| PFF | 47.4 | 27.95 | -41% | Preferred stock index |
| HYG | 104.33 | 66.25 | -36.5% | High yield bond index |
| SLV | 13.395 | 8.85 | -33.9% | Silver trust |
| BSR | 34.77 | 24 | -31% | BearLinx Alerian index (MLPs) |
| 30 yr bond | 4.864 | 4.105 | -15.6% | 30 yr US Treasury bond |
| AGG | 99.44 | 94.25 | -5.5% | U.S. aggregate bond index |
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