Market downturns can disrupt retirement plans and long-term goals. Our strategy seeks to help reduce significant drawdowns during recessions while aiming to stay positioned for growth in favorable markets.
The market has historically rewarded long-term investors. But between the start and the finish, significant declines have erased years of progress — sometimes taking over a decade to recover. We believe a disciplined approach to risk management can seek to reduce the impact of these downturns without requiring you to sit on the sidelines.
Three pillars of our approach.
Our strategy focuses on seeking to reduce your exposure during downturns and recessions, aiming to help preserve your hard-earned wealth.
We aim to participate in market appreciation, seeking to identify opportunities to grow your wealth during favorable conditions.
We actively monitor your portfolio and market conditions, making informed adjustments to align with your objectives and the current environment.
This is the chart most advisors show you. The S&P 500 since 1928 — it always goes up over time.
It looks great. And over a 100-year horizon, markets have rewarded investors. But most people don't have 100 years. They have a retirement to fund, kids to put through college, and a lifestyle they've worked decades to build.
Same chart. But now look at the declines — how deep they went and how long it took to recover.
Every one of these declines was devastating for investors who were fully exposed. Some took over a decade to recover. If you were withdrawing income during any of these periods, the impact was compounded further.
Let's look at two of the most significant declines in detail.
In early 2000, the S&P 500 peaked after years of tech-fueled growth. Over the next three years, it fell 47%. A $1,000,000 portfolio dropped to approximately $530,000.
The decline didn't happen overnight. It unfolded over months, with brief rallies along the way that convinced many investors the worst was over. It wasn't.
Investors who stayed fully invested didn't recover to their starting value until 2013 — thirteen years later. For anyone who was retired or approaching retirement, the impact on their financial plan was significant.
The 2007–2009 financial crisis saw the S&P 500 lose more than half its value. A $1,000,000 portfolio dropped to approximately $480,000.
For retirees withdrawing income, the damage was compounded. Drawing down a shrinking portfolio accelerates losses — you're selling more shares at lower prices just to maintain the same withdrawal, leaving less to participate in the eventual recovery.
The market didn't fully recover until 2012. That's five years of being underwater. For those who needed their money in the interim, the math was unforgiving.
Three tools in our risk management framework.
A protective put can be thought of as an insurance policy for your investments. By purchasing a put option on a stock or ETF, we seek to establish a "floor" beneath the position — aiming to limit potential losses regardless of how far the market may fall, while allowing for continued participation in any upside.
A covered call involves selling a call option on a position already held in the portfolio. This strategy seeks to generate income through the premium received, while maintaining ownership of the underlying investment. The tradeoff is that upside may be capped at the strike price if the position rises significantly.
When our trend analysis signals deteriorating market conditions, we have the flexibility to reduce exposure to equities and move to cash or defensive positions. Sometimes the simplest approach to seeking to manage downside risk is reducing your exposure to it.
A disciplined, repeatable framework.
The balance between equities, fixed income, and cash that aligns with your goals and risk tolerance.
By analyzing trends across multiple timeframes, we aim to assess the market environment and make informed adjustments.
We incorporate options strategies such as protective puts and covered calls that seek to mitigate downside exposure while aiming to maintain growth potential.
Explore our portfolio options or schedule a conversation to see how the Tactical Momentum Strategy may fit your goals.
