These charts would be a lot more useful if they included actual axis information to indicate what the dots were.
And frankly were not started in 1972. That seems like an awfully weird date to randomly pick for this sort of analysis. How consistent is your plot if you vary the start date in increments of 3 years? Do the 1969, 1966, 1963 and then also the 1975, 1978, 1981... 1995 charts all show the same trends?
Are you including dividend reinvestment in your TSM return? Or is that just share appreciation? Presumably your "real" return is post-inflation? What are some examples of the 83,000 portfolios that you picked that were better than the TSM? Where did the data come from, particularly for returns? What were the asset classes?
Any post showing a chart like yours and stating:
in the process I uncovered a nice visual demonstration of why just putting all of your money in a total stock market fund may not be the optimal choice from a risk management perspective.
Leaves me, as an engineering/data analytics type of person, quite skeptical.
Honestly, more than anything else that chart actually convinces me how unbelievably good of an investment market index funds are, especially for working Mustachians. When over a 44 year period an index fund is
still that competitive across a huge range of portfolios when it took
over 10 years to get any real return from the start date, that makes it is still a very competitive option to me (the post-inflation SP500 dividend reinvested fund took over 10 years to recover).
That sounds really, really damn nice and really a good investment choice.
It seems somewhat intellectually dishonest to build this sort of framework around a 1972 retirement start date and make the claims you are stating about risk analysis. Every single one of your statements needs qualification of "if you started in 1972" until you can show that the same trends hold true regardless of time period start date. Especially considering you are using gold/TSM in your calculations. Heavy gold portfolios will get hammered
hard in this analysis if you move the start date back even only a few years ($263/ounce in Jan 1972 vs $362 in Jan 1973 vs nearly $750 in Jan 1974).
If many of those "better" portfolios are including very large gold holdings then they will be very sensitive to your start date because you have arbitrarily picked a year where Gold gained nearly all of its inflation-adjusted return in the past 45 years. etc.
This is just one of the reasons why it is incredibly important to not cherry pick data and make a more wholistic approach when doing this sort of analysis.