Beginner

Lessons From the Best Portfolios in 2025

Beginner, Portfolio Talk

The new year is officially here, which means it’s an exciting time of year for investing researchers.

The new portfolio data has arrived!

All of the namesake Portfolios and Charts here at Portfolio Charts now have preliminary updated numbers through the end of 2025. Collecting data from so many government sources takes a bit of time and everything won’t be final for another month or so, but there’s enough “close-enough” data that there’s no reason to delay. Be sure to check in on the asset allocation you have been eyeing, as it was a pretty remarkable year in a lot of ways.

To ring in the new year, I always like to look back at the portfolio performance rankings over the previous year. It’s not so much to chase recent performance, but simply to see what we can learn about asset allocation in general. And there were a few notable lessons! So let’s kick off the new year with a quick discussion of what we can learn from the best portfolios in 2025.

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What to Do When It’s Time to Rebalance

Beginner

Christmas is fast approaching, which means it’s the perfect time of year to take a break from not worrying about investing at all. Between shopping for gifts, sipping warm beverages, and binge watching cozy holiday movies (yes, Die Hard counts), this is when I also set aside some time to think about the annual investing ritual of rebalancing my portfolio.

Some years that’s easy, when asset percentages haven’t moved much you can just leave things alone and move on. And others are more complicated. With crazy gold gains this year necessitating a big sale and a potentially sizable tax bill, this year definitely qualifies as the latter.

First world problems, I know. 🙂

Well, I just finished my own rebalance and have also received quite a few emails recently asking about the same topic. So while it’s fresh on my own mind and possibly yours, too, let’s talk a bit about the art and science of how to rebalance a portfolio.

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Minimize Your Miss

Psychology, Beginner

I have a good friend whose son is an accomplished golfer. Beyond the natural fatherly pride that he feels, there are also moments of awe where a wisdom borne from years of practice sneaks through in ways that you may not expect from such a young person. For example, when asked how he got so good at golf, his son replied with this (paraphrased) all-time gem:

Hole-in-ones are mostly luck, so I don’t fixate on hitting great shots. I practice minimizing my miss.

That’s not just solid advice on the golf course, but also a remarkable philosophy to live by.

It also struck home with me, as my investing philosophy is a little different than what you usually see in popular finance. Promoting trite “5 easy ways to maximize your returns” is a lot easier than explaining nuanced concepts involving uncertainty. But the idea of “minimizing your miss” is a great metaphor that brings the range of outcomes to the forefront. Wise investing isn’t about always swinging for the flag, but staying on the fairway.

The cool thing about working in visuals is that there are a few good ones that demonstrate this investing philosophy particularly well. So let’s hit the driving range and talk about the mechanics and benefits of consistent investing.

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The Right Assets Make the Portfolio Recipe

Updates, Beginner

Researching investments can sometimes feel like aimlessly wandering the aisles of a giant grocery store while hungry. You know you need something, but without a recipe in mind it’s easy to fall into the trap of grabbing the first easy but unhealthy thing that sounds good. In the end, there’s a decent chance you will regret your choice.

Or maybe you’re a foodie who has something in mind but reads every label and agonizes over minute ingredient lists. For educated shoppers, analysis paralysis can still be crippling as it takes forever to decide on the perfect option for everything in the cart. Does it really have to be this difficult?

The equivalent in the investing world is the absolute gauntlet of a process required to find the right fund. Open up your brokerage account or a good ETF screener, and the sheer number of fund variations are insane. Picture the market full of similar shoppers like you, and you’ll find the same assortment of people touching every apple, wondering what the words on the labels even mean, and loading up on prepackaged junk food. Same process, different store.

Solving the paradox of fund choice in investing is a tricky problem, and I have gone back and forth a few times over the years in how I approach it. But I have been playing with some new ideas lately, and I’m excited to announce a major site update that I think will make the process of building a portfolio a whole lot easier.

So if you’re ready for a break from staring at the produce, let’s talk about a better way to find the right portfolio assets.

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How to Succeed in the Worst Stock Markets

Beginner, Psychology, Theory

The US administration recently announced a sweeping series of tariffs on seemingly every country in the world, and the immediate market reaction was starkly negative with stocks falling double digits in just a few days and volatility shooting through the roof. Naturally, many people who track markets for a living are freaking out.

If you’re expecting me to join the growing chorus of chronically online personalities offering a long and important sounding take on tariffs and what I believe the people in charge should or shouldn’t do, that’s not really my thing. There are already enough people doing that, and to be honest I find the tone on both sides to be frustrating. It’s a complicated issue that very few individuals fully understand, which makes the arguments among newly minted trade experts a lot less informative than their confidence might imply.

And of course, the inherent political undercurrent that permeates the topic also has a way of distracting even very smart and respected people to the point of completely losing focus on what really matters. Ranting about government policies is an inherently unproductive activity that accomplishes nothing but raising your blood pressure and losing the respect of your peers.

As individual investors, we need and deserve actionable advice on how to handle tough situations that we have no control over. Reframe your mindset from one of fear and anger to one of resilience, and your entire paradigm changes. That proactive approach is more in my wheelhouse.

So to address the issue at hand, I’m going to avoid any guesses about the future of tariff policy impacts and concede right from the start that it’s possible it could be one of the worst economic decisions of all time. At that point, what matters is how you handle it.

Which brings us to an interesting question.

What are the worst stock market drawdowns in history, and which portfolios performed best in those same situations?

I’ve got the data. So let’s flip the script from reflexively pining over perfect market conditions to talking about what you can do to make money even in the worst possible financial headwinds.

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When Past Performance Is Absolutely Indicative of Future Results

Beginner

I recently had the pleasure of meeting some new people over happy hour at a local meetup group. Between a few drinks on the patio on a warm early-fall afternoon, we exchanged the typical “so what do you do?” icebreakers, shared some fun stories, and had a great time.

As the introductions turned to me, I guess it’s no surprise that the topic of investing came up. I talked a little about the website I run that studies historical data to help people make wise investing decisions without having to stress about keeping up with the markets. No big deal, but I’m pretty proud of it.

I was sitting next to a smart and accomplished guy who knew a bit about investing, and his natural reaction was a perfect mix of genuine, engaged, and polite. It went something like this: “That’s really cool. But as they say, past performance is not indicative of future returns. It’s too bad that historical data not very useful for decisions today.”

Honestly, his comment didn’t surprise me at all. Not only have I heard that from plenty of investors before, but I’ve also seen the same standard disclaimer on hundreds if not thousands of investing resources over the years.

Past performance is not indicative of future results.

This straightforward statement has become so ubiquitous that many investors simply take it for granted without giving it much thought. And as a result, many intelligent people normally predisposed to evidence-based thinking in other aspects of life nonetheless dismiss the field of portfolio backtesting altogether.

But here’s the thing. That throwaway sentence is often just flat wrong.

So for my new friend asking about my investing hobby and all of my old ones here wondering how to properly apply historical data to today’s choices, let’s talk about the limits — and power — of effective portfolio backtesting.

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Welcome to the Portfolio Olympics

Beginner, Goals, Portfolio Talk

Regardless of whether you watch every event or simply browse social media for highlights, I think we can all agree that the Olympics are a great spectacle. From athletic feats that boggle the mind to tears of both joy and agony, the raw passion, dedication, and ultimate triumph is hard to top in terms of pure inspiration.

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The Painful Investing Lesson in Elden Ring

Beginner, Psychology

Like millions of other Elden Ring fans, I’ve been spending many hours recently killing everything in sight in the new Shadow of the Erdtree expansion. For anyone not familiar, Elden Ring is a popular videogame in the RPG genre that is a wonderful combination of beauty and lore requiring a lot of skill, strategy, and patience to master.

That skill and patience requiring thoughtful stat allocations may ring a few bells, as it shares a lot of parallels with investing. I wrote about that perspective last year when I discussed Asset Allocation for Gamers, but Elden Ring hits hard on an especially important concept that I think is underserved in many investing circles — the risk of ruin.

So if you’ve spent many frustrating evenings like me getting repeatedly wiped out by a certain flame serpent, let’s talk about avoiding the same fate in the markets.

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Remember the Calamity of the Great Market Tsunamis

Beginner, Theory

To understand the difference between expecting the average and planning for a long, safe life, look no further than the beautiful ocean communities of Japan. Picture a small fishing village with the local economy built around the sea. A colorful pagoda stands in contrast to the green mountain backdrop with a snowy white peak. Kids play in the water, as a Zen Buddhist painter contemplates the waves.

The interesting thing about quality art is its sense of history, and there’s perhaps no greater theme in Japanese art culture than the topic of waves. For example, the title image is a famous woodblock print called The Great Wave off Kanagawa by the artist Hokusai in 1831. It depicts a fierce tsunami off the coast of Mt. Fuji, and is memorable not just for its beauty but also for its deep local meaning. As an island on the Ring of Fire, Japan knows a thing or two about the impact of tsunamis.

The typical day in coastal Japan is quite wonderful, with people congregating around the average sea level. But wander up the nearest mountain and you may find an old stone that looks like this.

tsunami stone

Placed after a deadly tsunami killed untold numbers of people in 1933, this one reads:

“High dwellings are the peace and harmony of our descendants. Remember the calamity of the great tsunamis. Do not build any homes below this point.”

Even the seemingly most peaceful ocean can quickly turn deadly with a single earthquake. And to this day, many locals heed these old tsunami stones to stay safe from harm. Historical markers are the guideposts that help them see beyond the average times and survive the worst.

To fight through the hectic modern culture and apply some of that Zen mindset to investing, I think it’s helpful to similarly seek any financial tsunami stones on the market shoreline. They’re all around if you just know where to look. So grab a cup of tea, and let’s talk about the impact of rolling investing waves.

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Why Dave Ramsey Is Dangerously Wrong About Withdrawal Rates

Retirement, Beginner

With a nationally syndicated radio show, best-selling books, and a popular financial advice service, Dave Ramsey is one of the most famous names in the personal finance space. He’s so trusted that he’s also a mainstay in many churches as a guest lecturer preaching his own inspiring message of financial freedom. I’ve long admired his ability to help people work their way out of debt, and he’s doubtlessly touched more lives and improved them for the better than I can ever dream of reaching.

So as a fan of Ramsey’s message of self empowerment and snowball approach to debt elimination, I found it particularly painful to watch a recent episode where he goes on an extended rant about safe withdrawal rates. Long story short, he’s not only dangerously wrong but also angrily dismissive of an entire field of research on the topic. The reaction among financial types on social media has been equally swift and negative, with both professional investors and educated amateurs alike taking their own shots back.

Personally, I find the bickering on both sides to be mostly unhelpful because it distracts from the core issue — the truth. So for the benefit of Dave’s audience who just wants to properly understand the topic, I wanted to do something a little more constructive.

If you’re a Dave Ramsey fan who would like to understand why his advice is not the right way to approach retirement and how you can create a much safer plan, this article is for you.

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