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As you may know, I have a real problem with those in my industry who tell investors to literally ‘do nothing’ as they watch their life savings disappear into thin air. No matter where we are in the world or where our money might be at a given time it makes a great deal of sense to prepare in advance your exit strategy in the event of real and present danger. This is not a recommendation, but it is an easy example from which every investor can learn. It’s a 1-2 punch to keep you from getting your assets handed to you.

Greater Diversification produced less declines and higher account balance

Slide 1. Notice how a traditional buy and hold in stocks did well and how an investor who owned two additional asset classes did better. The decline wasn’t as severe in 2000-02 and 2008-09. If your account held up better than most the last two times in the same decade markets were off 50% your portfolio may hold up better the next time the grits hit the pan.

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Slide 1 Video

Limiting losses can maintain your cash flow

Slide 2. In the second scenario we show what happened when the investor needed to withdraw $60,000 a year from their retirement balance of $1,000,000 the beginning of 2001. In both cases over $600,000 was withdrawn, but the portfolio with three asset classes held up better than the investor with only one type of investment vehicle. We can agree that three legs supporting your life savings is better than one.

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Slide 2 Video

Active Management systems can work like a thermostat to determine daily, is the call risk off or risk on?

Slide 3. As the Recession Monitor shown in red went north and stocks in blue went south, shares of stocks were sold to reduce losses. 2008 started with 5% of the portfolio in cash or money markets, shown in green, but you can see at the black arrow client money market accounts expanded to 60% of their account. Think risk off in 2008 as the markets had every investor running for cover. Think risk on in 2009 when negative volatility turned positive. Over time you can see that the percentage of cash moved back to 5% when the market gained its footing. Investors deserve to employ teams that look at their accounts daily to determine is it time to pour more fuel on the fire in an upmarket or water on the fire during severe downturns.

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Slide 3 Video


Securities offered through Securities America, Inc. (SAI), Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Investors Advantage and SAI are separate entities.

Important Information from FINRA to consider before transferring your account. Trading instructions sent via email may not be honored. Please contact my office at (805) 495-2077 or Securities America, Inc. at 800‐747‐6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

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