Our Approach to Investing:
Win More by Losing Less
By focusing on the downside risk first in any investment decision...
It enables us to determine whether we stand to get paid enough in return for the amount of risk we are taking. In general, an investment portfolio that sustains three-quarters of the downside while earning three-quarters of the upside of its benchmark generates the same return over time with much less volatility.
We take calculated risks and avoid making big bets. When you couple that approach with a diversified portfolio and a disciplined approach to rebalancing, we are able to generate more consistent and predictable returns over time.
Rather than assuming the risk of investing in any one particular stock or bond directly, we believe that adequate diversification and risk mitigation can be achieved by investing in a mix of actively managed mutual funds and ETFs.
If you invested $100,000 in the S&P 500 Index before the Financial Crisis in 2009, your portfolio would be worth roughly $422,060 on December 31, 2023. If you invested differently over that same period such that you received less of the return when the market was going up, but also less of the return when the market went down, your portfolio would be worth slightly more - roughly $425,624.
As we like to say, three-quarters of the up and three-quarters of the down got you all the up with only three-quarters of the down. In simpler terms: the portfolio captured the same returns (or possibly better), but with less* volatility.
This is due to the math at work when recovering losses. For example, it's easy to believe that if you lose 50% and then gain 50%, you should return to your starting position. But you would actually need to gain 100% to break even from a 50% loss.
That's why successful investing is not just about what happens during bull markets. Your returns during bear markets can be just as - or potentially even more - important.
Source: Blackrock. For illustrative purposes only.
Source: Morningstar. As of 12/31/2023
Hypothetical portfolio that captured 75% of each bull and bear market of the S&P 500 when benchmarked to that index. Returns shown are based on the S&P 500 Index only. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.