You find a million bucks buried in your backyard on New Year’s Eve. But you’re lucky – you don’t really need it. So you think “I’ll invest it”. And you do, on January 1st, 2025 – all in stocks. From that day until today, you don’t check your account, but you do check the news periodically. Here’s what you’ve seen:
And just yesterday:
After all that, how do you think that million is doing? Can’t be good. Probably horrible. 2008 all over again. You’re nervous. You’ve been nervous. Should you do something now? You bet everyone else already has. Will you be the last to get out? How bad is the damage? So you check it last night. Here’s what it would look like (approximately!):
You’re surprised. You’re ecstatic. You do a backflip. It goes badly. But you have an extra $40,000 that you didn’t have on January 1st to pay the medical bills. So all is well.
A diversified equity portfolio (like you may have if you’re a client) is up a bit over 4% this year, plus or minus. Bonds are up a couple of percentage points too. Five months in, we’re having a very average year – on pace for 10%. You could argue it’s a fantastic year when you account for the headlines! We sure do.
If we had a time machine and were able to show you these headlines on January 1st, what would you have said? What would you have done? Hopefully, you would’ve said “Headlines? Ha! – no thanks. They’re useless” and then hit delete.
Who are we kidding – we’d all read them! But you get the point. What we read in the papers and how it can make us feel is typically much different than what happens. Leave the headlines to the day traders. You’re investors.
Cheers,
Your Great Oak Team