Tactical investing can provide both an offensive plan for growth as well as a defensive strategy to help avoid market drops.
We can learn from history. For instance, let’s look at some historic stock market results, like the S&P 500 from January, 1996 to December, 2017. The market peak was in the year 2000, when many investors felt the market couldn’t fail. It was a “NEW DAY” and technology was taking us to new heights. Looking back in time from the peak in 2000, most investments had incredible performance for five, 10, 15—even 20 years.
It was a time I’ll never forget.
I remember a representative from a technology mutual fund sitting in my office showing me the 1999 performance of their mutual fund that was close to 250% for that single year. Seeing the chart and how it was going almost straight up, I told him there was no way it could sustain such high performance. Well, he laughed and said, “Steve, there is never a bad time to put money with a good money manager and we have the best. See!”
Well, the moral of the story is that the fund certainly didn’t perform as well as they had hoped it would from March of 2000 to the end of 2002. In fact, many investments had losses around the 50% range during 2000 – 2002, and again in the year 2008.
Here’s a little lesson on math: when your investments go down 50% you have to gain 100% just to break-even and that takes precious TIME.
History gives us a really good indication of how markets have performed. And although there are periods of great rise, there are also periods of significant loss.
And that is why being a BUY & HOLD investor during markets like this could be very risky.
Take a look at TACTICAL INVESTING. With Tactical Asset Management, the portfolio holdings are adjusted continuously in response to both market & economic conditions. The goal for investors is to make money in up markets and minimize losses in severe market declines.
