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
| Loss | Gain | 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 |
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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
| Decade | Return |
|---|---|
| 1930s | – 71% |
| 1940s | -49% |
Bear Crashes
| Period | Return |
|---|---|
| 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
| Strategy | Stocks | Spread | |
|---|---|---|---|
| Start | $100 k | $100 k | $0 |
| End | $6.4 mil | $3.9 mil | $2.4 mil |
| Growth | 6,303% | 3,862% | 2440% |
| Return | 8.6% | 7.6% | 1.0% |
| Risk | 9.6% | 12.6% | 3.0% |
| Sharpe | 59% | 36% | 23% |
To see the strategy at work, take a look at the following
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– Start a 3 month trial –
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For those properly prepared, the bear market is not only a calamity but an opportunity
Sir John Templeton
