Your Primary Key to Investment Success:
Avoiding the Big Losses
The world is a dynamic place, not a static one. Your investing, therefore, should be a dynamic process.
Our HedgeFolios don’t take the “buy and hold forever” approach. The goal is to have plenty of cash during big declines and bear markets, and then be able to invest for the next rise or bull market near the bottom. In fact, our strategy is designed to enable the investor to profit from big declines, utilizing the inverse ETFs. Using a sector timing & allocation strategy, it’s possible to maximize exposure to the strongest sectors, and, when appropriate, effectively short the weakest sectors via inverse ETFs. This is exactly why the program is called HedgeFolios.
That means that during bear markets, you may actually be making profits rather than losing your shirt or your life’s savings.
How to Profit During Bear Markets
Using advanced technical analysis, we usually get “sell” signals on each investment before painful damage is incurred, and “buy” signals when a sector or index begins to rise. The signals don’t have to catch exact tops or bottoms (although sometimes they do), but they offer a drastic improvement to your investment strategy over the common “buy and hold forever” approach.
We don’t believe that taking the 5-10 year “buy and hold” approach, and riding through a 50% portfolio loss, is defensible. If this happened to you in 2008, you know it’s time for a change.
When selecting an advisor, performance during a bull market usually looks good. As the saying goes: “A rising tide lifts all boats.”
Often, advisors state their performance numbers by simply including their good years of outperformance, while minimizing their bad years of underperformance.
We believe it’s more important to understand how investment advice performed during the big plunges, crashes, crises like 1997-1998, and devastating bear markets, such as 2000-2002 and 2007-2009. Those are the important performance numbers. Bert Dohmen’s advice during these times helped our members not only avoid big losses, but even profit during the turmoil.
Here is an example of how “market timing” can produce big differences in investment performance.
Most investors think that the way to big investment profits is to try to catch the big winners. However, the smartest investment professionals agree that avoiding big losses will help you achieve superior long-term investment results.
Here is a chart of how a theoretical $100,000 investment would have performed over 20 years under three different scenarios:
1. Buy and hold (blue line)
2. Avoiding the 10 worst days (yellow line)
3. Avoiding the 10 best days (red line)
Obviously, the latter two strategies require market timing. The “buy and hold” strategy would have grown $100,000 to about $320,000 over this period. However, if you had missed the 10 best days, that performance would have reduced the performance to $140,000.
Many “buy and hold” money managers use that example to show that you should not try to “time” the markets.
However, now look at the upper line which shows the performance obtained by avoiding the 10 worst days. Your $100,000 would have grown to an amazing $700,000.
This shows why market timing is so important. You don’t have to catch the exact bull market tops in order to miss the 10 worst days. You only need to catch the major downturns and upswings in order to avoid big losses and profit instead. With HedgeFolios, our expert research and analysis will help identify these major market moves to ensure your portfolio is properly positioned.
How Market Timing Can Work for You
Recent history shows how important “buy” and “sell” signals from Bert Dohmen could have significantly improved your investment portfolio with just a few trades over the past 2 decades.
Let’s look at the S&P 500 index. It made a top in the year 2000, followed by a big bear market. Getting out anywhere near the top, even within six months, would have allowed you to preserve the profits of the prior bull market. The “buy and hold” approach, so often heard from Wall Street, would have caused you to lose your profits and likely suffer devastating losses as well.
The index recovered and got back to the 2000 top in 2007. Getting back into the market near the bottom in the year 2002, using the cash you would have earned from selling near the top in 2000 would have provided you with great profits.
That was followed in 2008 by the most devastating financial crisis since 1929. Getting out on October 13, 2007 when Bert Dohmen called it a bull market top (within 2 days of the S&P 500’s peak) would have saved you a fortune.
The low of that bear market occurred on March 6, 2009. On that exact day, Bert Dohmen identified the bottom and recommended that subscribers to his trading services “close out all short positions.” The market recovery started the next trading day. Many of the major indices climbed back to the 2007 and 2000 top. If you had large invested with large cash positions at the bottom, you could have made great profits during that rise.
Summary: there was no gain in the index for 13 years after the 2000 top. Considering the erosion in purchasing power through inflation, the real loss for the investor was substantial. Here is the chart of the S&P 500 from 1995 to the end of 2013. This shows some of our major market timing calls that helped our clients to profit and avoid big losses.
S&P 500 Index Performance: Jan. 1995 – Dec. 2013
- Buy & Hold approach: +1,390 points (303% return)
- Market Timing (traded on Bert Dohmen’s 5 calls): +2,890 points (629% return)
This explains why market timing is so important. You don’t have to catch each turn precisely, but capturing the major upswings and downturns will still make you much more money than the lazy “buy and hold” approach Wall Street brain-washes you with.
Wall Street promotes the fiction that “no one can time the markets.” The above chart shows how Bert Dohmen has done it consistently for over four decades.
Proven Track Record
Bert Dohmen’s track record over the past three decades demonstrates that it is possible to time the markets. In fact, he has called many important market tops, often within 1-2 days.
Our HedgeFolios program is based on a very successful membership service from our related firm, Dohmen Capital Research, known as Private Portfolios.
Bert Dohmen’s Private Portfolios service has kept members safe during the big declines and helped them to profit during the strong rises. Clients not only avoided all the major market meltdowns, but profited from them. That includes the big bear market of 2000-2002, as well as the devastating crisis of 2007-2009.
In fact, during the global crisis of 2007-2009 Private Portfolio clients were advised to buy five inverse ETFs on September 4, 2008, just before the big meltdown. These ETFs soared on average 72% in just 6 weeks’ time during the crash.
Inverse ETF Performance During the Crash of 2008:
9/5/2008 – 10/10/2008
The above shows the advantages of timing the broader stock market. Even better performance can be obtained by timing individual sectors. The most popular stock market sectors, those mentioned by all the analysts you see, hear, or read in the media, usually have strong declines even while the broader market may still be rising.
A good example is the precious metals sector from 2011 to 2013. Everyone thought that because of huge money creation by the Federal Reserve, the value of the dollar would plunge. That, in effect, would cause gold and silver prices to soar. In reality, the precious metals had the worst decline in several decades. Many mining stocks declined over 60% while the broader stock market soared.
Bottom line: timing the various sectors is very important. It is our specialty and area of expertise, using advanced technical analysis. You don’t have to know anything about technical analysis, however, to become a member of our HedgeFolios program. We will conduct the research and analysis needed to attain superior performance and provide you with our guidance. Just watch for our signals and see your portfolio grow.