MANAGING MY OWN MONEY DURING SELLOFFS

These are trying times for individual investors.  We reached bear market territory on the S&P 500 on Monday.  Seeing your life savings drop by 20% in less than two months is difficult for all of us. 

Stock market collapses like this one seemingly come out of nowhere.  They happen for all sorts of different reasons:

• Financial System Collapse (2008)

• Overvaluation Bubbles Bursting (2001)

• Pandemics (2020)

• Inflation Spikes (2020)

• Global Trade Wars (2025)

Nobody can predict the timing or the cause, but market collapses happen about once every five or six years on average.  They can be very painful emotionally and financially.

The average price decline of bear markets is 37% with some as high as 55% or as low as 25%.  The dot-com crash lasted 7 years and the Covid crash only lasted six months.  The average length of a bear market is 4.5 years.  That is a long time to wait for your account to get back to break even.

I give a lot of investment advice so I thought it would be interesting for you to hear how I manage my own money in times like this.

Prior to 2019, I struggled mightily with my investing strategy.  Like many of you I tried and failed with all of the approaches pushed by the investment professionals.  I was very frustrated with the lack of effective solutions.  I hired and fired all of the big and small money management firms.  I didn’t think it was a good deal to pay them a 1% fee to create a Target Date fund that I could build myself.

I wanted the high long-term returns of the stock market, but I couldn’t stand the old “Buy & Hold” approach.  It made no sense to me to sit and watch my money drop by 40% and to simply wait five years for the market to recover.  I painfully recall losing half my money in 2008.

It is still mind-boggling to me that Buy & Hold is the best strategy that the investment industry has to offer. 

I bet you don’t feel great right now having the industry tell you to just “Ride it Out”. 

I was forced to create my Market Signals system back in 2019 because the industry has no investing solution that provides both high growth AND protection against losses.  They offer high growth strategies that come with large losses in bear markets OR they offer low growth strategies that are exposed to less risk and fewer losses.  Nobody offers the best of both worlds – until now.

As soon as I developed and tested my new and better investing system, I began deploying it for my money and my family’s money.  I invest every dollar of my own money by following the Market Signals system.  I am not aware of another approach that provides market beating returns with safety and protection in bear markets. 

I have been using it since 2020 and first benefitted by using it during the Covid crash.  The Covid crash was almost too easy a test for my system.  It was like cheating.  The market dropped by 34% in a straight line over about one month.  It then went on to rebound very quickly and also in a straight line. 

The graph below shows where my system sold out of the stock market and where it bought back in.  In a bear market, my system ends up selling high and buying low – the opposite order of the traditional buy low and sell high mantra.  But it works just the same, only in reverse order.  Our system actually makes a profit in bear markets for this reason.

By the time that the S&P 500 returned back to even six months later, my system was actually showing a gain of 28%.  Market Signals gained 40% in 2020 compared to the S&P 500 which gained 16% for the full year.  We were only invested in the S&P 500 so the extra gains (24%) were all generated by Market Signals trades during the bear market collapse and recovery. 

As I mentioned earlier, 2020 was unusually easy for my Market Signals system.  Not all bear markets are this straightforward or quick.  But they all follow a similar pattern of rapid declines, and gradual but steady recoveries. 

THE CURRENT SITUATION IN 2025

The Market Signals system had me sell all of my stock investments in early March and I have been sitting with my funds parked in a Money Market fund since then.  All of my customers received the exact same instructions.  We are all earning 4% while we watch the market decline. 

Earning 4% is well below the Market Signal’s long-term goal of 13% per year, but it is much better than losing 20%.  I can also sleep well at night knowing my life savings are protected in this crazy time.  I believe my Market Signals customers have the same peace of mind that I do. 

I hope they also feel good about the 45% percent gains that Market Signals generated over the previous two years (2023 and 2024).  Market signals was pretty much fully invested in the S&P 500 in 2023 and 2024.  We can be comfortable being 100% invested in the best stock market index funds BECAUSE we have protection built in with Market Signals.  Without having this downside protection it would not make sense to be 100% invested in the stock market. 

With five years of actual trading results and 100 years’ worth of back testing, I have proven that you can “have your cake and eat it too” with investing.  The industry would tell you otherwise but consider the source. 

The industry would say (and does say) that we are “Timing the Market” and that nobody can time the market.  We are not timing the market.  We agree that nobody can time the market.  We don’t get out at the exact top or get back in at the exact bottom.  See the Covid Crash graph.  We are not perfect.  But in a bear market we just need to get out before the worst of the decline occurs and get back in before the rebound has gone too far.

It is not rocket-science although the math we use does look like something used by NASA.

Using industry terms, what we are doing is called Tactical Asset Allocation.  Tactical Asset Allocation is commonly used in the industry.  We just do it differently.  TAA occurs when stock exposure is increased or decreased based on market conditions.  Or when money is shifted from large cap stocks to small cap stocks.  For example, this year people have been moving money out of the US stock market and into the European market based on regulatory changes in the US.

The difference between the way we use TAA and others use TAA is that we use a series of computer algorithms to make the changes.  Our computer algorithms were developed using actual stock market data for the last 100 years.  The industry uses TAA when they “expect” the performance of individual market segments to change.  They use predictions.  And their predictions have not been back tested or tested in any way. 

Projections and predictions in the financial markets are wrong most of the time.  Even if they are correct, most people get the timing wrong.  Industry professionals will use a fancy analysis and fancy logic to create faith in their assumptions.

I believe in data and not assumptions.  This stuff is too hard to predict.

YOUR OPTIONS

You should not sell your stocks unless you have a disciplined and proven approach to get back into the stock market when it rebounds.  You can’t do this based on emotions or gut instinct.  You should stay the course if you don’t have a system like Market Signals to help you get back in. 

My system works because it is quantitative and disciplined and because it has been tested extensively. Flying by the seat of your pants doesn't work with investing.

I used to make these moves emotionally or based on instinct and Buy & Hold beats undisciplined ways to get in and out of the market.  Reacting emotionally is worse than Buy & Hold as painful as Buy & Hold can be.

Your other option is to sign up for our Market Signals newsletter.  It only costs $39.95 per month with no commitment or obligation.  You can cancel at any time and for any reason. 

We have customers who have avoided losing 10% of their life savings in the last month.  At only a cost of $39.95 a month, that is a pretty good deal.  You can sign up now and learn more by clicking here.

Stay Disciplined My Friends,

Phil

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Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.

Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.