Make sure your portfolio 'stays diversified': Noah Kerner

Alright, we are in the first trading day of the second-half of the year. If it's anything like the first half of the year, a lot of people with big anticipation, you know, mostly mostly not all the time, but mostly as the markets do on a good year in the in the first half, they they do pretty well in the second-half, maybe not as strong, but but, but that does seem to be the pick off today. Let's get the read from Noah Koerner. You I think you know him very well. You know Acorns very well. This app is hugely popular among investors of all sorts. He is the chairman and the CEO. Noah, good to see you. Thanks for having me. How does the market look to you guys and interest in your site these days just from what's happening in the markets? Well, we're all about diversification, so we try to get people not to look at the markets. We try to get people to stick with it and remember that it's about time in the market, not timing the market. So I'm not a prognosticator, unlike a lot of people who might come on and say this stock, that stock, I'm suggesting staying diversificate, diversified portfolios. Stick with it, contribute regularly, and you'll benefit from the power of compounding over time. All right, For young people, that strategy makes sense for an older person and you're telling them to stick with it, like, for me, long term is lunch tomorrow. Yeah. So I'm wondering how you advise your various groups because they've grown considerably. We automate it. So when you sign up for Acorns, we ask you a series of suitability questions and then we construct a portfolio for you based on things like risk tolerance things, things like age, all these kinds of factors. And so if you're older, you may end up in more of a conservative portfolio. If you're 18, you'll probably be in an aggressive portfolio, but it's totally custom constructed. And then along comes AI, all right, along come these names like NVIDIA. And so it's and others. And people want of any age group, they want in on that, that that's a gravy train. I want in on that. What do you tell them? Diversification, stay diversified. Don't stock pick, don't trade with the majority of your money, with the vast majority of your money. Put it into a diversified portfolio. Stick with it and focus on the long term. OK, so let's say you do have NVIDIA in there and you do have some of these tech stocks that even if you did nothing at all, but the sheer force of, of, of just their surge, they now make up a majority of your portfolio, if not the lion's share of it. How, how does Acorn get back to those people say, look, you're kind of all in chip stocks. It's it's your whole game. We give broad exposure to the whole American economy and then we automatically rebalance the portfolio for you. So it's, it's really, you know, you're getting exposure to thousands of stocks and bonds. How do you, you rebalance it with their permission, right? You're not. Are you selling it? If someone has is, let's say 90% NVIDIA or, or or AMD or Intel or what are you telling them? You're not going to, you're going to be in ET, you're in ETFs. So it's not 90% understood. All right. And what do people tell you when you are rebalancing? I mean, I think they feel great that there's somebody looking after their financial best interest and automating the process for them. I don't think, you know, the vast majority of us don't understand these concepts. So if I can offload it to somebody else, that's fantastic, right? And I know somebody else is looking after my interest on a long term basis and all I have to do is sign up, contribute money regularly, and then the rest is taken care of for you. You know, we saw a surge in a lot of democratized investing, you know, in in the high points of bull markets and, and it fritted out over the day traders. You were the stories of people who are trading stocks and their taxicabs over the taxicab drivers. Do you worry we're getting back to that, that that it's getting a little too frothy? I mean, I worry about that all the time. And when I think about the last 18 months in the market and S&P has grown 30%. So if you're trading in and out and you're making all these moves and you're reacting and getting nervous and responding to panic or trading something because you think it's a good idea, I look at it as you're missing out on broad exposure to the market over time and the power of compounding over the last 20-30, forty years. Like the market has grown over 10% a year, you know, since inception, averaged out, right? Yeah. And I like to say if you thought about starting 40 years ago, if you had invested 40 years ago in a diversified portfolio and benefited from 10% plus average gains a year and you didn't have to do anything and you didn't worry about it, that would be amazing. So I think, you know, it's a sort of travesty that people don't do that. And then I have family members that have pulled money out right after big recessions, you know, let's say the market drops 40%, then you pull your money out, 'cause you, you, you panicked and then you bought something 'cause you think this is going to go up. It's human nature, right? Right. Well, what did you, I always remember when the Internet boom went bust around 2000. Today you, you didn't make your money back, nor did the NASDAQ for close to a decade. Yeah. So how do you explain that to people who might be getting in on on the height and maybe not that that yes, the market does have that average annual return if you ironed it all out. But there can be quite an adjustment period. Yeah, there are. There are times when the market goes down and for an extended period of time, which is why you have to have a long term outlook. And I love the mantra. Every downturn in history has ended in an upturn. It's something I remind myself when I'm panicking in the moment. Do you worry though? You know, people have forgotten where this market was a couple of years ago. And of course it was COVID. There was everything else that we're getting a little too giddy or, or, or we get within, you know, OK ranges here. Yeah, I, I mean, it's human nature. People get excited, people get nervous, but put your money in a diversified portfolio, stick with it. We automate that at Acorns, obviously for you. And so, you know, that's and make it easy and I believe user friendly grass charts, all that stuff. Noah, thank you very much. Very good seeing you, Noah Koerner, Acorn's Chairman and CEO.