To take advantage of the bull market, have you invested in equity funds? Do you know how much your fund can drop in a down market? Would you believe 40%?
If you have tried to check the past record of a mutual fund, you may have found obtaining information difficult. Unless you look in the right places, recently available information does not cover a real down market like we had in 1973/1974. So current-day investors have no idea of how their funds will perform in a real bear market.
In fact, I have called many mutual fund companies and asked them how their funds performed in 1973/74 and I am often told they do not have that data (more likely, they do not want to talk about it). However, I was able to dig up some data on funds that many people consider to be safe and conservative. Just look at how they did during the last bear market:
Fund |
1973 |
1974 |
Vanguard Windsor |
-25.02 |
-16.8 |
Vanguard Wellington |
-11.83 |
-17.73 |
Alliance Quasar |
-23.16 |
-43.38 |
American Mutual |
-10.7 |
-15.93 |
Davis NY Venture |
-23.98 |
-20.17 |
Fundamental Investors |
-27.03 |
-26.36 |
Mairs & Power Growth |
-25.12 |
-34.25 |
Nicholas |
-52.7 |
-33.44 |
Sife Trust |
-18.0 |
-34.96 |
Dow 5 |
18.75 |
-6.25 |
Dow 10 |
2.75 |
-2.25 |
Note that the minus sign (-) means that the fund lost money. Do you own any of these “conservative” funds? Some of the funds that many investors consider to be very conservative, really took a beating, losing 40% or more over 2 years. That’s why we have as a fundamental element of our client investment portfolios the protection of capital in down markets. Bear markets do and will come along. If you are not ready for them, you may see your “conservative” fund drop 40%.
Some investors tell me, no problem, they’ll just hold on while their funds drop. The problem is, very few people can do this. It seems simple to talk about this now while you’re sitting on profits, but when losses start mounting, I see the typical investor panic and sell. The emotional stamina to hold on during a bear market fades pretty quickly. As to the model we use, the Dow Dividend Strategy, you can see from the above table that those portfolios increased in value during these 2 bad years. How would you like your portfolio to increase while the market declines?
If you want to protect the gains you have, we can send you a brochure on using the Dow Dividend Strategy explaining how it has protected investor capital. If you have looked at this system before and have procrastinated, I encourage your action. Don’t wait until the market takes 10% or 20% of your capital before acting. Employ a system that has had a long record of producing above market returns while protecting principal in down markets. Call us at 925-935-5488 for the free report.