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Our market-adaptive strategies are designed to deliver profits in Bull Markets ... as well as profits in Bear Markets. When you can compound "Profits on Top of Profits", you can achieve super-charged investment growth over the longer term.
To demonstrate how the Model Portfolio strategies performed relative to the market during the most recent 5-year Bull Market cycle, Figure I tracks the estimated cumulative account growth of each generic Model Portfolio strategy month-by-month. The calculations assume the reinvestment of all earnings and no taxation, so they most accurately reflect account growth within a tax-deferred investment vehicle such as an IRA or 401k plan.
For comparison purposes, the graph also tracks the cumulative account growth of a typical "Buy and Hold" investor that is assumed to have a simple portfolio holding an index mutual fund tracking the Standand and Poors 500 Index (S&P 500 Index)..
Figure I
Figure I powerfully demonstrates the potential for Confident Strategies’® Model Portfolios to make a meaningful difference in your future financial picture. Three of the Models were able to "beat the market" over the complete 5-year cycle; and the most conservative model portfolio captured most of the market's appreciation with much less risk.
What can really improve your longer-term investment performance? The answer is -- How well you perform in the bear market years when most people lose their shirts in the market! Avoiding the "Big Loss" is the key that can help you transform your longer-term investment returns through the simple mathematics of compounding.
This chart shows how the different Model Portfolios could have added to your net worth during a punishing 2 1/2 year Bear Market that was triggered by the bursting of the "Tech Bubble" in 2000.
How were they able to do it? Mostly by nimbly getting out of the market. With all of your money earning interest in money market funds or bonds, you could have made money too while the stock market dropped 45%.
Even better ... two of the Model Portfolios can generate increased gains in Bear Markets by investing in a "Bear" mutual fund that goes up in value when the market goes down.
Figure II
| Generic Model Portfolios: | Annual 2003 | Annual 2004 | Annual 2005 | Annual 2006 | Annual 2007 | 5 Year Total Return | Benchmark Series |
|---|---|---|---|---|---|---|
| Conservative Portfolio | 23.7 % | 8.1 % | -3.4 % | 9.9 % | 0.4 % | 42.5 % |
| Growth Portfolio | 38.4 % | 10.6 % | -0.7 % | 13.0 % | -0.3 % | 71.2 % | Performance Extention Series |
| Performance Xtender | 39.7 % | 12.6 % | 5.2 % | 9.9 % | 4.9 % | 90.8 % |
| Max Xtender | 88.0 % | 16.1 % | -7.8 % | 23.8 % | -3.0 % | 141.7 % | Traditional Approaches: |
| Buy and Hold (S&P 500) | 28.7 % | 10.9 % | 4.9 % | 15.8 % | 3.5 % | 79.4 % |
| Typical Static Asset Allocation Mix (30/30/40) | 22.0 % | 10.5 % | 1.9 % | 8.5 % | 3.1 % | 53.7 % |
See our trackrecord compared to other Newsletters ...
For purposes of comparison, we show estimated returns for two common investment approaches-“buy and hold” and a traditional static “asset allocation” mix of 30% Large Cap stocks, 30% Small Cap stocks and 40% bonds.
Definitions:
Definition of a “buy and hold” Investor: We estimate the typical buy and hold investor's performance with a 100% allocation in an index fund representing the S&P 500 Index. This is a credible benchmark since many mutual fund managers are paid to beat the performance of this stock market index over time.
Definition of an “asset allocation” portfolio: We assume a fixed allocation over time of 30% Large Cap Stocks, 30% Small Cap Stocks and 40% Bonds. This allocation is typical of those recommended by financial advisors for investors with more than ten years until retirement and with an average risk tolerance.
Note on Investment Return Calculations: The investment returns shown here, and elsewhere in this site for our strategies, are a combination of actual, live investment results blended with back-tested, computer-simulated results. Computer simulated results are used for periods before each program began tracking live performance results (which are shown in red in the Five Year Summary table above). As always, please understand that historical performance is no guarantee of future results.
