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 Gone are the days when you can simply diversify - hang on and hope to survive!
Don’t take chances with your retirement!
We all remember the good old days of the 1990's when all one had to do was to “put up your sail” and go with the winds of a nice, long “Bull Market”. Everybody was winning.
Then the market winds changed and began to blow right into our face. Investors were told to “diversify and hang on. It will all work out in the long run.” They were often shown a chart showing how much a dollar had grown over the last eighty years and how high the average returns have been over that period of time.
The Problem:
Most people don’t have 80 years to live during retirement – twenty years or so seems much more likely.
As can be seen by the chart below, over the past 100 years there have been four long-term (secular) bear market periods and three long-term (secular) bull market periods which can extend longer than ten years. Retiring at the beginning of a long-term bull market could be a great experience, but retiring during a long-term bear market could be very distressing if you simply tried to diversify and hang on.
The Good News:
Even secular bear markets have good times. We call these good times cyclical or short-term bull markets. Interestingly during the secular bear market of 1966 to 1982 there were actually more up days than down days. See the chart below. If an investor can take advantage of the good times – even in secular bear markets – he or she could see a lot less stress during the period leading up to and into retirement.
This Is Where We Come In:
We believe one must be prepared to “Sail” when the winds are in our favor, and to dig in and “Row” when the market winds are in our face. As we’ve said before: “Gone are the days when you can simply diversify - hang on and hope to survive.”
The Hillspring Financial Tactical Asset Management Program “TAMP”:
In order to properly be prepared to “Sail” during good times and “Row” during tough times one must have both offensive strategies and defensive strategies. A proper combination of these strategies based on an investor’s position on their lifecycle, risk tolerances, and income needs can make a huge difference in their financial longevity and ultimate lifestyle.
As can be seen by the accompanying diagram, (click on strategy for more details):
There are two offensive strategies:
And two defensive strategies:
Each of these strategies has several highly effective money managers with a unique objective and discipline in managing money.
Bringing it Home to You:
If you are currently within 15 years of retirement or already retired, it will be very important for you to seriously consider what the TAMP program can do for you. “Buy and Hold” strategies work fine during bull markets, but they can unravel a portfolio in a hurry during secular bear markets.
Do you have a 401k?
If you have a 401k; click here to see how this program can help you manage the assets in your 401k plan.
Are you within 5 years of retiring or already retired?
If so, you will be interested to know about our Paycheck Preservation System (PPS), which is designed to help protect your retirement income during bear markets. Click here to learn more about the PPS system.
Now it’s up to you:
Simply send us a note, or give us a call and we will sit down with you for a FREE, no obligation, initial consultation. During this time we will answer any questions you have on this process and help you determine how it can benefit you.
Definitions:
Tactical Constrained:
This approach attempts to capture broad market returns while also seeking to take advantage of shorter term opportunities or mitigate risks through moderate allocation shifts. Tactical constrained approaches may also put the positive winds of “sailing” markets to work in your portfolio, but they also create the potential for the portfolio strategist to add additional value through active, near term allocation decisions.
Strategic:
A strategic asset allocation approach creates a mix of equities, fixed income and cash designed to capture broad market returns while balancing risk and volatility. The goal of a strategic asset allocation approach is to put the positive winds of a sailing market to work in your portfolio.
Tactical Unconstrained:
This approach removes the limits on the extent and frequency of allocation shifts, allowing the portfolio strategist to move more aggressively in response to changes in their outlook. Tactical unconstrained asset allocation approaches can provide flexibility for rowing markets when headwinds place a premium on active asset class management.
Absolute Return:
These strategies are for risk-adverse investors comfortable with modest returns in exchange for highly active risk management that may include frequent allocation shifts, non-traditional asset classes and/or alternative strategies. Absolute return strategies may be used for attempting to row toward your goals regardless of the stock market’s direction.
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Have recent financial conditions and shifting economic winds left you uncertain and full of questions?