The Importance of
Our Participate Yet Protect Philosophy
We Take Downside Risk as Serious As you SHOULD!
We offer to share our ideas with you at no cost or obligation
Is it better to accumulate reasonable gains on a yearly basis or have years with exceptional returns combined with years of losses? While occasional large, positive returns may look attractive, ultimately it's consistency that may be the best approach. Need Proof?
Proof in the Numbers
Suppose you invested $100,000 in the S&P500 Index* on March 24th 2000 just before the "tech bubble" market decline. As of October 9th 2002, the bottom of the market decline the S&P500 Index had gone down about 49%. The value of your S&P500 investment would be only about $51,000. To fully recover from your 49% loss, you'd need to gain 96.08% versus the 49% you were down. Let's look at the numbers.
$51,000 x .9608 = $49,000 + $51,000 = $100,000
While the S&P500 “only” lost 49% the Nasdaq 100 lost 83%!
Now seemingly we in recover from the 2007-early 2009 market plunge, the current investment outlook appears quite favorable, there is always risk in the market and we continue to recommend “participate yet protect” strategies to reduce downside risk as much as possible while still participating in potential market gains.
* Investors can not directly invest in indexes.
A Look At Declines & Recoveries
The graph shows how the larger a loss, the greater the subsequent recovery required to break-even.
Therefore, a consistent approach to investing, which seeks to avoid negative returns, may prove to be more beneficial in the long run than aiming for sporadic short-term gains.
Many new clients coming to us wish they had repositioned their portfolios for the realities of 2001-2003 instead of still being invested based on market conditions of the late 1990s. We are in a totally different market environment today and portfolios have to be adjusted accordingly.
We believe the key to the best long-term investment returns is not so much hitting the biggest winners in a good market but avoiding the big losses in a falling market. This is because if you suffer a typical bear market loss of 37%, it takes a 59% gain to just break-even again.
We Take Your Financial Future As Seriously as YOU SHOULD !
Large enough to serve yet small enough to care
Committed to Success Through Client Satisfaction
Last updated 1/4/2010
Securities offered through Cetera Advisors LLC, member FINRA/SIPC. Cetera is under separate ownership from any other named entity. Investment advice is offered through Hutchison Investment Advisors Inc, a Registered Investment Advisor.
The existence of this website should not be construed in any direct or indirect manner as a solicitation for advisory business or securities business in any states beyond the states in which associates of Hutchison Investment Advisors Inc. or Cetera Advisors LLC maintain registration.