When we developed Young Research’s Retirement Compounders® investment program, our aim was to find a compelling competitive advantage to make the Retirement Compounders® program a big winner, especially during bad times. Our overriding goal was to help investors like you achieve investment success with comfort and confidence. Our strategy was to accept underperformance during speculative market runs, with the expected trade-off of better performance during down markets.
The idea was never to beat the market over time or on a consistent basis. Rather, we fully expected the low-risk Retirement Compounders® program (both price risk and business risk) to trail the major market averages.
Why would we design a program to underperform?
The ugly reality of investing that nobody likes to talk about is that the average equity investor vastly underperforms the market and the funds he invests in. This is true even for investors who own market-beating mutual funds.
Dalbar, an investment analytics firm, is the authority here. Dalbar’s data shows that the average equity investor regularly underperforms the S&P 500 by 3-5% over long periods of time.
Volatility and Emotionalism
High volatility and emotionalism are to blame. When stock market volatility rises, many investors panic and sell near the lows, only to add to their stock positions once again in the dying days of a bull market.
Young Research’s Retirement Compounders® program is comprised of dividend paying common stocks selected from the over 40,000 global publicly traded companies. The Retirement Compounders® program favors high dividend payers, those with a history of dividend payments, and companies with a long record of consecutive dividend increases.
Some of the companies included in Young Research’s Retirement Compounders® program have paid a dividend every year for over a century. Others can boast a more than five decade record of annual dividend increases. The combination of high dividend payments today and dividend growth tomorrow is a potent tonic that can help you become a more confident, comfortable, successful long-term investor.
Retirement Compounders® Investment Program Helps You Stay the Course
Young Research’s lower-risk Retirement Compounders® program helps investors avoid the emotionally charged investment decisions that can sabotage returns. Investing in high-quality businesses with long records of regular dividend payments offers the comfort necessary to stay the course when financial and economic stress arise. The end result is often greater long-term returns for investors.
How has the Retirement Compounders® program performed relative to our expectations?
During the 2008-2009 bear market, the Retirement Compounders® program held up better than the broader market, just as they were designed to do. During the brief and unique COVID induced bear market, the RCs fell slightly less than the market, and during the recent correction that has taken the S&P 500 to the edge of a bear market (-20%), the RCs are down 6%.
In the time since inception, which includes two speculative bull runs and two bear markets, the Retirement Compounders® program performance has far exceeded our expectations. The chart below shows that since inception, the Retirement Compounders® program has kept pace with the S&P 500 and far exceeded the return of the MSCI All-Country World Index while taking much less risk than either index.
We, of course, can’t promise that the Retirement Compounders® program will continue to outperform the market, but we can promise that we will continue to manage the RCs with the same dividend-focused, low-risk strategy we have pursued since the program’s inception.
For investors looking to pass on the burden of daily portfolio management, Richard C. Young & Co., Ltd. crafts dividend-focused common stock portfolios that are based on Young Research’s Retirement Compounders® program. You can sign up for Richard C. Young & Co., Ltd.’s monthly client letter (free, even for non-clients) here.