In the years following the stock market crash of 2000 – 2002, and with renewed intensity after the 2008 collapse, people have begun to realize that, for the most part, the retail model of investing is broken. The “buy-and-hold” approach that had worked so well in the long bull market through 1999 has not fared so well since, as the stock market has seen declines of 50% from 2000-2002 and again in 2008. Statistically, for the “buy-and-hold” approach to have a reasonable probability success (defined as achieving the stock market’s long term annual average of 9%+) we must hold on for decades. We need strategies that can work in any market conditions and over realistic time periods. And we need real returns, not “relative” returns. What good is it really to beat the S&P 500 by 10% in 2008 when the S&P 500 lost 37%? While the buy/hold does work well in good markets, it has not provided effective downside protection in bad markets. And bad markets can last a long time.
There are strategies, “absolute return” strategies that are designed to work in good and bad markets. These are conservative, moderate and growth-oriented strategies that depend on the skill and expertise of the investment manager and their methodology, rather than holding on, riding things out and hoping for the eventual rising market tide that lifts all investment boats. Many investors and advisors alike have no effective defensive element for their investment strategies and unfortunately find themselves susceptible to the inevitable downtrends that occur in all markets. This is the nature of “buy-and-hold” investing.
Absolute Return Strategies seek to minimize downside risk and enhance returns by taking advantage of market trends. Goals of the strategies include:
•Positive returns every year
•Preservation of capital
•Lower market risk
Secure Money Strategies uses a rule-based approach in its strategies. We systematically seek to identify critical turning points in the equity and fixed income markets. However, no one can consistently time the market, getting in at the bottom and out at the top. Instead, our objective is to capture the majority of large market moves over time and to avoid significant market declines by being safely on the sidelines in money markets when there is no clear trend. By making these tactical adjustments, Secure Money seeks to reduce the draw downs characteristic of unmanaged equity and fixed income portfolios, while at the same time capturing the gains of bull market rallies. This Absolute Return approach strives to achieve positive returns every year, regardless of the direction of the capital markets, rather than trying to beat a benchmark like the S&P 500 Index.