This chart (produced by Blackrock) shows annual returns by asset class (i.e. stocks, corporate bonds, Treasuries, real estate, International stocks, small company stocks, etc) from best performance to worst performance from 1988 through 2008. As you can see, there's no clear pattern in any given year. It is impossible to predict with accuracy which assets will have the greatest returns from year-to-year. As a result, many investors, including myself, invest with a strategy of diversification -- owning virtually everything (US and International stocks, US Govt/International and Corporate bonds, real estate, gold, natural resources, etc) and hold these investments for very long periods of time. The portfolio should be adjusted as needed as the investor's financial situation changes and when his/her portfolio shifts significantly from the target asset allocation.
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