The Less You Lose, The More You Gain
What’s the Number?
Think about it. How much can your clients lose before they call and say, “You’re fired”? When this happens, your AUM drops. When it happens a lot, your AUM plummets.
When the ugly bear market starts to claw down the averages. a traditional Modern Portfolio Theory approach to investing can result in some serious reductions in accounts under management.
So buy-a-pie-chart-and-hold-it can spell disaster.
Remember 2000
Think back to 2000, the year the Dot Com Bubble blew up. Between 1995 and March 2000, the Nasdaq had risen 400%. But from March 2000 to October 2002, it fell 78% from its high.1
The Dow and the S&P tanked as well. If you owned the S&P in 2000, you would get back to even roughly in 2008, just in time for the next bear-market plunge. Then, after five more years, you could pat yourself on the back and say, “Whew, dodged a bullet there.” Thirteen years to get back to even.2 Not a pretty sight. How long would your clients stay with you if that happens again?
So what’s your number? Would your clients tell you to take a hike if their accounts dropped 10%? 20%. Maybe 78%?
Remember 2020
In February 2020, the virus struck. The NCAA cancelled March Madness (surely one of the biggest sell signals of all time). The market began its precipitous fall.
Forbes advised readers not to touch their faces or their portfolios:
“These last few weeks have been terrifying for almost anyone with money in the stock market. You may be tempted to reduce the amount you have in stocks or even get out altogether, but this could be a big mistake.”3
One survey showed that most investors took that buy-and-hold approach:
“As many as 66% of US adults with retirement or investment accounts have intentionally done nothing with those stock-related investments, according to a Bankrate survey released Tuesday”.4
As 2020 drew to a close, everybody who held was back to even or perhaps enjoyed a gain. But imagine what would happen if the March 2020 drop ended up taking 13 years to recoup the losses in the S&P. How many clients would send you Holiday Greetings. How many would tell you to take a hike
Investors are interested only in the “long term” when the market is rising. But when their accounts decline to the point of pain, they just might blame you, move their accounts, file a complaint, or worse, go to court.
Your Mission: Avoid Take-a-Hike Losses
Yes, you want your clients’ accounts to grow. As they succeed, so do you. But you must absolutely avoid significant losses. When your AUM drops because clients drop you, getting it back to even requires finding new clients. And that, as we all know, is not walk in the park.
Become a Member of the Inner Circle
Who among us wants to send out hand-holding letters and field hundreds of calls when your clients’ portfolios begin to tank. Why not learn to play defense when the bear rears its ugly head. That’s what we do here at No More MPT.
And you can, too, when you become a member of the No More MPT Inner Circle.
Membership gives you access to the portfolio managed by our pros. When we make trades, you can make the same trades.
Here’s What Happened in 2020
When certain technical signals flashed their warnings in late February, our advisors employed Active Management and Technical Analysis, and began to unwind certain long-the-market ETFs. And, for protection, they began to purchase SPXS, an ETF producing gains equaling three times the decline in the S&P.
We watched as market indexes continued to plummet in March and April. We started to look for a bottom. Could we magically call the exact bottom? No. Of course not. No one can. But we did watch our technical charts and then started to unwind the short positions and gradually take on new longs.
Up Twenty Percent
In October of 2020, the S&P got back to even for the year. At that same time, our growth portfolios enjoyed gains of 20% YTD, net of fees.
Your Clients Can Enjoy Similar Results
As an Inner Circle Member, you’ll learn Active Portfolio Management and Technical Analysis—two skills that can help you know when to go long in an up market and when to play defense in a down market.
As an Inner Circle Member, not only will you learn the skills that produced our +20% results, but you’ll also have access to our actual portfolios. When we buy, you’ll get an immediate email notification. When we sell, ditto. You can follow along with similar trades for your clients and enjoy the results our clients enjoy.
Protecting assets and making them grow—two sure-fire ways to hold on to your AUM and to make it grow larger and larger over time.
1 https://en.wikipedia.org/wiki/Dot-com_bubble
2 https://www.advisorperspectives.com/dshort/updates/2020/10/08/the-s-p-500-dow-and-nasdaq-since-their-2000-highs
3 https://www.forbes.com/sites/financialfinesse/2020/03/30/dont-touch-your-faceor-your-portfolio/#6cb7c8d557ee
4 https://markets.businessinsider.com/news/stocks/investors-havent-touched-stock-portfolios-percent-sell-buy-coronavirus-rout-2020-3-1029049206#