Stock Market Investment Strategies
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| Market Commentary | Buy and Hold sure looks good! |
Buy and Hold
Ibbotson uses an 80+ year average.
This is fine if…
You are a giant tortoise
You are a sequoia tree
Most humans have a good 15-20 years to accumulate their retirement wealth.
There are many 15-20 year periods in the Ibbotson study that lost money.
1929 – took 25 years to break even
1966 – took 16 years to break even
1973 – took 10 years to break even
2000 – 7 years (Didn’t last long, did it?)
2008 – Worst Market since 1931
2009 – What happens next?
The Rest of the Story
Active portfolio management versus buy and hold
S&P 500 (April 1984- October 2000) =14.83%
Out of Market BEST “X” Days: 10 Days = 11.64%
Out of Market WORST “X” Days: 10 Days = 20.60%
Out of Market BEST and WORST “X” Days: 10 Days = 17.07%
Traditional Asset Allocation
| Large Cap Value | Large Cap Blend | Large Cap Growth |
| Mid Cap Value | Mid Cap Blend | Mid Cap Growth |
| Small Cap Value | Small Cap Blend | Small Cap Growth |
Correlation
| 1. | 2. | 3. | |
| 1. S&P 500 | 1.00 | ||
| 2. Mid Cap | 0.95 | 1.00 | |
| 3. Small Cap | 0.78 | 0.70-0.84 | 1.00 |
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1. |
2. |
3. |
4. |
5. |
6. |
7. |
8. |
1. Cash |
1.00 |
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2. US Bonds |
0.05 |
1.00 |
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3. US Stocks |
0.35 |
0.30 |
1.00 |
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4. Int’l Stocks |
0.20 |
0.20 |
0.68-.85 |
1.00 |
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5. Emerging Market Stocks |
0.00 |
-0.15 |
0.45 |
0.60 |
1.00 |
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6. Real Estate |
0.40 |
0.00 |
0.10 |
0.15 |
-0.30 |
1.00 |
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7. Leasing |
0.64 |
0.08 |
0.05 |
0.01 |
0.00 |
0.13 |
1.00 |
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8. Commodities |
-0.20 |
-0.10 |
-0.25 |
-0.10 |
-0.05 |
-0.05 |
0.10 |
1.00 |
Diversification
Are All of Your Eggs in One Basket?
Core and Explore Strategy
Core and Explore is a unique Absolute Return Strategy that blends a long only Core position that stays invested at all times with the objective of producing a positive return in both up and down market environments and a
Long/Short hedging technique (Explore).