Chris and Cliff forwarded me an article last week asking: what would you do with your portfolio if you knew what was coming?

The article referenced the still unresolved debt-ceiling situation and proceeded to list many pretty lousy events over the past 30 or so years.

It made me think of a chart we made when we started Acropolis with small images depicting awful news with the growth of a $1 invested in the S&P 500 overlaid on top.

The images included pictures of the Great Depression, World War II, Vietnam, the OPEC oil embargo, the 1980s insider trading scandals, and about two dozen other things that I can’t remember anymore. Through all of that, the S&P 500 did fabulously.

A little more than 20 years ago, I wondered what that might look like, given what’s happened since then. I haven’t recreated the chart, but consider some of the significant events since we got going:

• When we launched, the S&P 500 was already in the second-worst drawdown in history and lost more than -50 percent from the peak.
• In response to the 9/11 attacks, the US fought two conflicts in Afghanistan and Iraq as part of the War on Terror.
• The 2008 Global Financial Crisis unseated the 2000 Tech Wreck as the second-worst stock market loss in US history, and the financial system nearly collapsed.
• Multiple governments in Europe nearly failed, and the future of the European Union was called into question.
• Interest rates drop to zero in the US, fall well below zero in multiple European countries, and stay that way for years.
• We have a global pandemic that cuts US gross domestic product by almost a third, sends unemployment up ten percentage points, and disrupts our way of life for what felt like an eternity.
• The bond market suffered the worst losses in US history when interest rates jumped higher to combat the highest inflation in decades.

This is just a partial list, and I am exhausted!

Knowing all of that, would you have wanted to invest your money in stocks and bonds?

If you created a relatively basic 60/40 stock bond portfolio with 45 percent in the S&P 500, 15 percent in the MSCI EAFE, 37 percent in the Bloomberg Bond Aggregate, and three percent in one month Treasury bills, you would have earned high-single-digit returns with a level of volatility that you’d expect for this portfolio.

I don’t want to report specific numbers because this is a hypothetical analysis that uses broad assumptions, like no fees and expenses, perfect monthly rebalancing, no sub-asset classes like mid-cap or emerging markets, no style tilts like value or momentum, and a bunch of other things that you’d encounter in the real world.

Moreover, the specific number doesn’t matter because it won’t be the same over the next 20 years. The events will be different, hopefully, less dramatic, but who knows? What will be the impact of artificial intelligence? What will happen with China and Russia, will we onshore jobs? And that’s just what I can think of this second. The list of unknown unknowns is infinite.

Looking at past returns is easy because you know what happened, and it’s a lot harder when you’re staring at the unknown, as we always are.

I don’t know what the next 20 years will bring. Still, I think the global economy will continue to grow, governments and corporations will borrow money, businesses will make money, and investors will likely be rewarded for taking sensible risks.

In the face of the debt-ceiling issue, the next thing, the next thing after that, and the next things for the next decades, we’ll keep pursuing our globally diversified, balanced portfolios of stocks and bonds. We’ll keep rebalancing, tax-loss harvesting, pursuing asset location strategies, and diving deeper and deeper into financial planning so that clients have good odds of meeting their goals in the face of what’s next, whatever that may be.