PROTECTING YOUR 401K FROM LOSSES

Do you have a proven investing strategy in place to protect your life savings from another stock market meltdown?

Or are you just going to Buy & Hold & Suffer?  Or are you just doing to “wing it” and try to adjust your investments on your own?

The investment services industry and all the professional advisors have let everyone down with their lack of solutions to the “safety” issue.  I’ve often discussed how their Asset Allocation strategy only smooths out your returns by limiting your gains in up markets.  It does not do a good job of protecting your money in bear markets.  Look no further than 2022.

You don’t want to make emotional decisions when the market swings wildly over short periods of time.  Many people panic and sell their stocks at the bottom and then buy back in at the top.  This guarantees that you will absorb even bigger losses.

Stock market volatility causes many people to just stay out of the market.  But this leads to really low investment returns (3% to 4%) and not enough money to retire comfortably.

Fear leads to the biggest investing mistakes that people make. 

I get it.  Dealing with the irrational cycles of the stock market is very hard.  That is why I created the Market Signals system.  The industry just did not have a good solution to this problem of keeping your money safe in difficult markets. 

We all want Growth and Safety.  We have been told we can’t have both – that you can either have an investment strategy built for Growth or one built for Safety.  I simply couldn’t accept this.  I thought we could use the markets irrational movements to our advantage. 

We know that we will see market corrections (drops of 10%) every other year on average and bear market declines (drops of 20% or more) about once every six years. 

We also know that the market always rebounds from both corrections and bear market collapses.  Sometimes it can take a long time for the recovery (four plus years) but it always recovers. 

The market is also trending higher about 85% of the time.  In these rising markets, we see average annual gains of 15%.  So, you want to be fully invested in the stock market most of the time to capture these excellent returns. 

Bear market crashes only represent about 15% of market cycles. But they are extremely painful.  Prices drop at an annual rate of 39% in bear markets.  Avoiding that financial and emotional pain should be a priority.  The problem is that nobody knows when they will appear and why they will appear.  The “talking heads” are always wrong with their market predictions. 

I spent the better part of a decade using my “Mad Scientist” data skills to create the computer models that drive my Market Signals system.  The only reliable solution to the safety problem is a disciplined and data-driven approach that takes emotion out of the equation. 

Market Signals does not predict when crashes will occur.  It simply kicks into gear after they have started.  We don’t attempt to “time the market.”  We react to the market.  Bear market declines last an average of eleven months.  We use a probability-based risk system to indicate when to get out of the market and we use a different set of algorithms to tell us when to get back into the market. 

We alert our customers to get out before most of the damage is done and when to get back into the stock market when the coast is clear. 

Most of the time, we are “all in” on the market to capture the large long-term gains of the stock market. 

In tomorrow’s post, I’ll show you exactly what happened in 2022 and 2023 for our customers using the Market Signals system. 

The system is fully explained in my book, FIX YOUR 401K, which is available on this website and on Amazon.  You can also learn more about Market Signals on this website. 

Happy Investing,

Phil

---

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.