My buddy Wes at Empiritrage & Turnkey Analyst just put out a fun new study going back to the 1920’s. He wanted to know the answer to the question: “What if you had perfect foresight in picking stocks, and could each year pick the top 10% of best performing stocks? How would you do?”
The answers were a bit surprising to me, around 30% CAGR with 70% drawdowns. ie even if you are a perfect buy and holder, you can’t avoid bear markets…and even if you have the perfect market neutral fund, you still have huge drawdowns!
Quick chart then download: