Timeline on the Disintegration of the USSR: Infographic

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Opne of the major events of the last century was the dissolution of the USSR. Not only did it lead to the demise of the other superpower but also ended up creating a bunch of new countries. Though militarily Russia is still a superpower economically and politically its power has diminished with the collapse of the USSR. Kristyna Foltynova at RadioFreeEurope/Radio Liberty recently posted an excellent infographic noting the important events leading to the demise of the USSR. A short excerpt from that infographic:

On December 25, 1991, the Soviet Union ceased to exist as a sovereign state. Its collapse was gradual and, some would say, even inevitable. Here are some major milestones in the dissolution of the U.S.S.R., which put 15 new countries on the map.

How Did It Start?

The Soviet Union was once the largest country in the world, covering more than 22 million square kilometers. It consisted of 15 Soviet socialist republics but was highly centralized for most of its history. Although the U.S.S.R.’s official language was Russian, more than 200 other languages and dialects were spoken, and it was home to more than 290 million people of various ethnicities.

According to some, the dissolution of the Soviet Union began when its last leader, Mikhail Gorbachev, came to power and introduced reforms that were aimed at ensuring more democracy and economic prosperity. There were others, however, who also played a significant role in the last days of the U.S.S.R.

 

See the complete infographic at the RFE/RL site here.

Source: The Undoing Of The U.S.S.R.: How It Happened, RFE/RL

Two Surprising Facts About U.S. Mutual Funds

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Some investors prefer to invest via mutual funds than individual stocks or ETFs. As with any asset type, though mutual funds have their advantages there also disadvantages. The first is most funds that exist at the time of investment won’t exist after 20 years. This makes them less than attractive for long-term investment. According to an article at Dimensional Fund Advisors, in the period from 2001 to 2020 only 41% of the funds were survivors – meaning of the 2903 funds that were existing in 2001 only 41% (or 1,190) existed at the end of 2020.The remaining funds were closed for any number of reasons. So for a long-term investor the probability of picking a fund that will exist in 20 years is pretty slim.

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Source: Key Questions for Long-Term Investors, Dimensional Fund Advisors

Another cons of mutual funds is performance. Very few of them ever beat the market or their benchmarks. Based on the above article, only 19% of the funds outperformed their benchmarks during the 20 years. Or to put it another way less than one-fifth of the funds were outperformers.

For Fixed Income funds, the survivorship rate was a little better at 45% but the winners were even less at 11% of the total funds during the 20-year period.

Even the above performance figures can be misleading since it depends on the benchmarks. Not all funds use proper benchmarks and a inappropriate one can skew a funds’ performance levels.

S&P 500 Index Annual Returns From 1926 To 2020: Chart

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Stocks generally tend to perform well over the long-term. However in the short-term stocks can be volatile and extreme crashes are also possible. Since it is impossible to predict when the equity market soar or decline it is wise to be patient and hold investments over many years. The US equity market has had many up years than down years since 1926 as shown in the chart below:

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Past performance is no guarantee of future results. Actual returns may be lower. Investing risks include loss of principal and fluctuating value. There is no guarantee an investment strategy will be successful. Indices are not available for direct investment. Index returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual investment. In US dollars. S&P data © 2021 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

Source: The Bumpy Road to the Market’s Long-Term Average, Madden Funds

From 1926 to 2020, in just six years the average annual return came close the long-term average of 10%. Yearly returns have reached as high as 54% while yearly declines have been as low as 43%. So markets tend to go the extreme on either direction.

As mentioned earlier, the good news is the market has been up 70 times and down only 25 times since 1926.

The key takeaway is investors should not worry about one day or one week or one year declines. Instead they should keep their focus on achieving the long-term goal of earning a better return with equities than other investment options.

Related ETF:

  • SPDR S&P 500 ETF (SPY)

Disclosure: No positions

Growth of Consumer Price Index (CPI) vs. Tuition Inflation: Chart

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College tuition in the U.S. has increased consistently for many years now. I have written a few articles on this topic some of which can be found here and here and here. The following chart shows college tuition has more than double since 2001 relative to Consumer Price Index (CPI):

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Source: Your Personal CFO – Bourbon Financial Management

Healthcare Spending per Capita by Country 2020: Chart

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Healthcare spending varies across OECD countries. The average OECD country spends about 10% of its GDP on healthcare. However the US is an outlier and spends more than 17% of its GDP on healthcare.

The following chart shows healthcare spending per capita in OECD countries in US dollars. This chart does not show the figures as a percentage of GDP though.

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Chart Source: OECD

Source: The Healthcare (R)evolution by Niels Clemen Jensen, Absolute Return Partners LLP

According to Mr.Jensen, despite spending the highest on healthcare Americans have one of the lowest life expectancies in the OECD.