Strategy

The key to investing success is to avoid MAJOR losses while growing your assets

Why?

Because the gain required to make-up the loss can grow exponentially

LossGain Break Even
5.0%5.3%6 Months
10.0%11.1%11 Months
15.0%17.6%17 Months
20.0%25.0%2 years
30.0%42.9%3.3 years
40.0%66.7%4.8 years
50.0%100.0%6.5 years
60,0%150.0%8.4 years
70.0%233.3%10.8 years
80.0%400.0%14.1 years
90.0%900.0%20.1 years
Months to break even assumes you’ll earn the average return on stocks (the S&P 500 since 1928).

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62% of secular stock market cycles are bulls (gains) and 38% are bears (losses)

Unfortunately the standard asset allocation strategy (“strategic asset allocation”), is not designed to protect against major losses in bear markets.

Secular Bear Cycles

DecadeReturn
1930s– 71%
1940s-49%

Bear Crashes

PeriodReturn
1929 – 1932– 89%
1987– 31%
2008 – 2009– 54%

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Avoiding a major loss CREATES the opportunity to invest at lower prices and develop greater growth

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Period: 1966 – 2020

StrategyStocksSpread
Start$100 k$100 k$0
End$6.4 mil$3.9 mil$2.4 mil
Growth6,303%3,862%2440%
Return8.6%7.6%1.0%
Risk9.6%12.6%3.0%
Sharpe59%36%23%
This data is hypothetical and doesn’t represent an actual trading account.

To see the strategy at work, take a look at the following

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For those properly prepared, the bear market is not only a calamity but an opportunity

Sir John Templeton