Financial Planning Fridays #178: The Worst Investment Strategy Update for 2026

Hi friends, many investors add to investments that have recently performed well and either sell or avoid investments that have recently performed poorly. So, early last year, I introduced a concept to you and called it the worst investment strategy. What would happen if we only invested in the worst-performing major asset class from the prior year? To answer this, we examined the performance of seven major asset classes over the past 25 years.

We then studied two distinct and opposite strategies: invest in the best-performing asset class from the prior year, or invest in the worst-performing asset class from the prior year. Let's start with the popular choice first, investing in the best-performing asset class. This strategy has produced an average annual return of 5.3% over the past 25 years, and an investment of $1 million grew to $2.17 million.

Now, let's look at doing the exact opposite, and often the least popular, investing in the prior year's worst-performing asset class instead. The results are stunning. This counterintuitive strategy resulted in an average annual return of 9.1%, and a final investment value that was almost triple the strategy of investing in the best-performing asset class, with a $1 million investment growing to almost $6 million over the past 25 years.

So, how do we take advantage of this for you at Presilium? By rebalancing your investment accounts on a regular basis, which in practice means doing something often not viewed as a popular decision in the moment: selling part of your investments that have recently performed the best in order to invest more in those that have recently performed the worst. By doing this, we hope to decrease your overall risk, improve your returns over time, and in turn reach even more of your financial goals. Thank you, and I look forward to talking with you next Friday morning.