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Why We Didn't Own Oil

Why We Didn't Own Oil

January 22, 2016

It's safe to say we haven't recommended oil companies or funds to any of our clients over the last few years.  Let me make clear this is not because we saw the recent oil crisis coming a long time ago, or even a short while ago.  We do not have a crystal ball and we vehemently oppose market timing. 

The reason we do not recommend oil and have not recommend oil generally is because of the fact that oil, like gold, silver and orange juice, is a commodity.  Commodities are used to try to hedge against inflation and they are, in many ways, a part of inflation or deflation.

Nothing has provided greater risk control over the long term than equities, which are historically without principal risk over 30-year periods (unless you’re mistaking volatility for loss, in which case you’re already doomed). And there has never been a source of increasing income as powerful or reliable as the constantly rising dividends of the Great Companies in America and the world.

Today’s retirees will average age 62, which means they were born in 1954. The S&P Index was in the 30s, and the dividend at $1.42. The relevant numbers as I write are 1,800 and $40. Remember never to mistake temporary decline or volatility for loss.