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Telltale Charts - Reversion To The Mean Analysis - Portfolio Toolbox
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Detective Sherlock Holmes

Telltale Chart

Telltale charts were introduced by John C. Bogle in a keynote speech to the Morningstar Investment Forum in June 2002. Telltale charts allow you to visualize relative performance against a benchmark and highlight changes in direction more clearly than a growth chart. Bogle originally used this chart to illustrate reversion to the mean (RTM) properties of investments. The colored line in the chart is calculated by dividing the value of each investment by the value of the benchmark on that date. Each line starts at 1.0 at the beginning of the chart time frame. The line increases in value as the investment outperforms the benchmark, and decreases in value as the investment underperforms the benchmark. A horizontal line means the investment is achieving the same returns as the benchmark. If the line drops below 1.0, that means the investment underperforms the benchmark relative to the beginning of the chart time frame. A telltale chart makes it easier to identify the trend of an investment and whether it is outperforming or underperforming a benchmark. More information on the telltale chart is available on Bogleheads.

Past performance is no guarantee of future returns. Increased risk provides no guarantee of return.