Why the out dated "BUY, HOLD and HOPE" strategy no longer works!

Have you ever watched cable television shows that match several smartly dressed financial professionals against each other and as they pontificate about which stocks to buy, which stocks to sell and give opinions about the general direction of the country and the economic world?

It makes for great television, however if you look at history and dissect it without bias, you will see that the talking heads are not in the business of defining success as your wealth increasing, but from ratings.... Can you say Suzy……..
 
Studies show that although the general direction of the stock market over the last few decades has been an up trending one, until the correction of 2000 and beyond, not understanding how the behavior of investors does influence markets and therefore stocks and bonds has cost many, much of the gain the have worked so hard to acquire. 
 
Fear and Greed are two emotions that have always and will always influence the movement of markets and thus most people’s portfolios...
 
When you look at most publications that track mutual fund performance over many years, you will see that a great number of funds that did very well in secular bull markets (green or growth periods), did among the worst in secular bear markets (red or unstable sideways markets) which in our humble opinion is where we are at today and have been since 2000!
  
For  years advisors have told their clients “you’re long term,” and that “buy and hold” strategy worked well.  However, the last ten years have proven to be quite different.  As an example, let’s take a look at the Vanguard Index 500 no-load mutual fund VFINX (considered to be a good non-managed indexed fund by many).  Had you invested in this fund on Dec. 31st, 1999 @ $135.33 and utilized the “buy and hold – you’re long-term” strategy for a ten and a half year period ending July 22nd, 2010, you would have had virtually no growth and would be sitting at a share price @ $98.57.  Your account would have been down -27%. On top of that, real inflation (not necessarily the number we hear on television) would have beat the purchasing power or your money to death.
 
Remember a good definition of insanity is doing the same thing over and over again and expecting different results. That is not to suggest that investing in the stock market is crazy, however if your strategy does not have a specific, unemotional plan to buy low and sell high, history proves that it is likely that you will not grow your hard earned dollars in any meaningful way as you march toward retirement.  
 
We believe we have found a better way, and would enjoy visiting with you about how to adaptively navigate the financial storms that may lie ahead!