UPDATE 7.1.22: Market conditions have become unstable, and Americans who have been busy speculating on things like electric vehicle firms, SPACs, cryptocurrencies, and other fads are becoming acutely aware of the troubles. Markets have posted the worst first-half since 1970. The Wall Street Journal reports:
Global markets closed out their most bruising first half of a year in decades, leaving investors bracing for the prospect of further losses.
Accelerating inflation and rising interest rates fueled a monthslong rout that left few markets unscathed. The S&P 500 fell 21% through Thursday, suffering its worst first half of a year since 1970, according to Dow Jones Market Data. Investment-grade bonds, as measured by the iShares Core U.S. Aggregate Bond exchange-traded fund, lost 11%—posting their worst start to a year in history. The blue-chip Dow Jones Industrial Average lost 15%.
Stocks and bonds in emerging markets tumbled, hurt by slowing growth. And cryptocurrencies came crashing down, saddling individual investors and hedge funds alike with steep losses.
The market’s declines are scaring investors who didn’t plan properly. If you’re an investor who wants to stop worrying about a market crash, there is a better way. Read on to understand how this approach may work for you.
Originally posted July 6, 2020.
Young’s Dynamic Maximizers Portfolio®
Are you worried about how a stock market meltdown could hurt you? What does a stock market meltdown look like? Think back. What were you up to at the turn of the century? Feels like a long time ago, doesn’t it? Are you aware that during this period, the speculative NASDAQ (larded with non-dividend payers) endured five annual declines of greater than 20%? And over 30% was knocked off the NASDAQ Index in three of these “take you out of the game” debacles. Moreover, the horrific 2008 collapse peeled 41% off the NASDAQ.
Remember, when you lose half your money in any period of time, you must double your money just to get back even.
A Brand New Portfolio Concept
I have introduced a new portfolio concept to keep investors safe and dividend-centric during the next stock market collapse. I have tweaked my original work on dividends and interest, along with my long-time interest in gold (I have held my original 1982 China Gold Pandas for decades), to produce what I call the Dynamic Maximizers® portfolio.
What is the Dynamic Maximizers® Portfolio?
The Dynamic Maximizers® portfolio is a fine-tuned derivative of Young’s original Maximizers portfolio. On the stock side of the portfolio, I focus on high-barrier-to-entry businesses with lasting competitive advantages as well as firms with long records of paying and increasing dividends. On the bond side, I use a mix of Treasuries and investment-grade bonds whose weights vary depending on the opportunities and risks in the bond market. I also occasionally move the portfolio to a maximum safety position when conditions warrant.
The portfolio concept is simple and conservative, but as we all know too well, knowing how is simple, but actually having the discipline, intestinal fortitude, and patience to bring off a Maximizers portfolio compounding strategy is quite another matter.
Who should invest in the Dynamic Maximizers® Portfolio?
The Dynamic Maximizers® portfolio is ideal for retirement investors, IRAs, and education programs, to be used instead of fixed-income portfolios in periods of historically low and manipulated interest rates. Dynamic Maximizers® portfolio investors should, however, recognize going in that long dry spells of underperformance can be expected and are just part of the game with such a conservative approach.
What kind of performance should you expect from the Dynamic Maximizers® Portfolio?
Past performance is no guarantee of future success, but I am proud to say that Young’s Dynamic Maximizers® portfolio hasn’t suffered a single down year this century. Compare that, by example, to the neck-snapping ups and downs of the NASDAQ Composite.
Total Gains This Century
Win the War, Not Every Battle
What is most shocking about this long record of outperformance is that the NASDAQ actually beat Young’s Dynamic Maximizers® portfolio in 15 of the 22 years profiled. A 7-and-15 MLB starting pitcher record would get a player banished to the bullpen. My Dynamic Maximizers® portfolio strategy wins the war, and it does so with no down years. Furthermore, in 17 of the 22 full years this century, returns for my Dynamic Maximizers® portfolio have fallen within a 3% to 10% range. For the outgunned NASDAQ, the deviation from best to worst year is a breathtaking 91 percentage points. And the bone-chilling NASDAQ record includes six down years, four of which were bruisers. No half-sensible retirement investor is going to sign on for that back-snapping volatility.
Remember my cardinal rule of portfolio crafting: “Always analyze risk before worrying about potential returns.”
Young’s Dynamic Maximizers – Shocking to Behold
How does your retirement portfolio look?
- Do you actually have any idea what you are doing? Do you feel like you are over your head and investing with a crap-shoot mentality?
- Are you subsisting on outmoded, far-too-big mutual funds or, worse yet, those ghastly oversized index funds?
- Are you a total neophyte on bond investing and pretty much devoid of understanding of the miracle of interest, patience, and compounding?
If your answer is yes to any of these questions, you may require a whole new battle plan to strengthen your investment strategy.
Since 1978 Young Research has developed strategies for conservatives like you.
Warm regards,
Dick