We believe knowledge is power. So we take a lot of time to educate our clients about the most important aspects of investing.

We want you to have a very good understanding about the importance of asset allocation – which is an investor’s overall exposure to very broad categories of investments (ie: Stocks, Bonds, Gold, Real Estate, & Cash)

Our beliefs have consequences – so it is absolutely critical we base our beliefs on solid reasoning and evidence. Emotions (especially fear) can derail the most disciplined investor.

The antidote to getting derailed, in our view, is conviction – which can be strengthened by becoming a student of history.

So here’s some long term history for you. The chart below highlights the growth of One Dollar (after inflation) between 1802 and 2012: (We trust that’s long enough for everyone?)

Source: Jeremy Siegel, Stocks for the Long Run (fifth edition, 2014)

All returns above are expressed in “total real returns” meaning they include reinvestment from dividends, as well as capital gains or losses, and measured in terms of constant purchasing power. (Your return AFTER inflation)

When it comes to protecting your purchasing power, bonds have carried a higher risk than stocks. Gold has been even worse.

So while Bonds, Gold & Cash may very briefly outperform stocks over very short periods of time, (This is when the prophets of Doom make their way into the spotlight) – they have not been the safest investments over very long periods of time. Owning businesses has been by far the safest asset class. That is for any investor with a long time horizon, who is not scared out of them at the wrong time.