Q: Why did your all equity portfolio do so poorly last year?
A: This is a question I get almost every year that my recommended portfolio underperforms the S&P 500, the benchmark in the mind of most investors. My portfolio is almost always going to be different than the S&P 500 as it is made up of asset classes that are built to be different than the benchmark. For the period 1970-2014 the average difference between the S&P 500 and my worldwide equity strategy was about 10% a year. The biggest difference was 1977 when the S&P lost 7.2% and my recommended equity combination made 26.8%. Over the entire 45 years the S&P compounded at 10.5% and the worldwide portfolio compounded at 11.8%. Their standard deviations were virtually the same, as well as the worst period losses. What was very different was the difference in annual returns. Expect it!