Once upon a time we looked at the re-ordering of annual returns to see what would have happened if the returns occurred in a different order, from Maximum to Minimum or Minimum to ...

>Yeah, yeah. I remember. You got some chart. Yes, like so However, it only dealt with an S&P portfolio starting in 1970 and ... >And, having nothion' better to do, you wanted to generalize, eh? Well ... yes. I thought I'd allow the user to pick any 30-year period from 1928 to 1970 and pick a withdrawal rate, then press a button or three and get a pretty picture of their portfolio if'n the annual returns were reordered from Min to Max or Max to Min. >Why? The point is, by sorting the returns you retain the Mean Return and the Volatility and the Distribution of returns .... but you get wildly different results. >I assume there's a spreadsheet? Of course.

Figure 1

We can generate neat charts like so:

>What portfolio are you talking about?
It's not important, since I just wanted to illustrate the HUGE difference it'd make if you retain the statistical parameters, like Mean and Standard Deviation, but change the ordering of returns.

>Yeah, yeah, but what portfolio have you pictured?
It's actually 25% each of Large and Small Cap Growth and Value with 4.5% annual withdrawal (increasing with inflation), starting in 1928.

>What portfolio did you start with?
Oh, yeah. It was $1.00,but you can change things in the spreadsheet which looks like this:

Click on picture to download the speadsheet

>What's that other stuff, like put Min first?
Oh, almost forgot. You click that button and you get the historical returns except that the Minimum return is exchanged for the first return.
In the picture above, the first return was -10.1% (in 1966) and the Minimum return was -26.7% (in 1974) so those two are interchanged.

>And that makes a difference?
Sometimes it makes a BIG difference.