Frequently “Oaked” Questions

John Noonan Uncategorized

You Asked, So We’ll Answer

Introducing our new segment, FOQs, where we’ll answer some of the most common questions we’ve been getting in the last couple months or so, from clients, friends, family, or anyone curious enough to ask.

As usual, we’ll be straightforward, transparent and blunt. It’s the only way you’ll get the info you need to become a great investor, or remain as one. Each question will have a short, one-word to one-sentence answer, for those of you in a time crunch, and a long answer for a bit more insight.

Here we go!

FOQ: The news says the market is going up. So why do my returns stink this year?

Short: Your returns are exactly what they should be.

Long: Huh? We know, it’s weird. But here’s why. What you primarily see in any media is the S&P 500 and the Dow 30, two metrics that gauge how gigantic companies in the U.S. are faring. What these metrics are missing are mid-size companies, small companies, international companies of any size, emerging market companies of any size, and real estate stocks. In other words, about 97% of the investable market outside of the S&P 500, and 99.8% outside of the Dow, not even including trillions of dollars of bonds that we all invest in too.

As our clients, you all have diversified portfolios that hold all the types of stocks just mentioned. Recently, gigantic U.S. stocks have been leaving all else in the dust, by double digits. This isn’t new. It’s happened before and will happen again…just as all those other stocks will someday leave gigantic U.S. stocks in the dust, as they too have done before. Add to that the fact that no one can predict when any of that will happen, and the path becomes clear. Own everything – even when what you see on the news seems to be the way to go.

To put it another way, if your portfolio, or your friend’s portfolio, is up nicely this year, you’re doing something wrong! It won’t work in the long run, and you’ll only develop bad habits. It’s like gambling in a casino. You’ll eventually lose, but you’ll have some good runs in between now and then. At Great Oak, we are not gamblers. We are investors.

FOQ: Should I buy Bitcoin?

Short: No.
Long: Noooooooooo.

Cheers,
John & Bill