Our portfolios are constructed using an Asset Allocation Strategy which is based on the only 4 cycles the US economy can be in at any one time. At any one time, the economy will be in one of the four economic cycles listed below. The secret of the strategy is to own non-correlated assets that move for different reasons.
Therefore, when one asset class is moving down, another asset class should be moving up. There are only 4 liquid asset classes you can invest in. By owning all 4 in relatively equal amounts you eliminate the need to try and predict which asset class to own and or avoid.
The 4 asset classes listed above are the only ones you need to own in order to have the opportunity to prosper in all types of markets. The asset class that should follow each cycle is listed with that cycle. No matter what economic cycle the country is experiencing, one or more of these asset classes may provide a positive return for the year. In 2008, while the stock market lost over 35%, the Bond, Commodity, and Cash asset classes all had positive returns.
We believe the strategy which we began using in 2009 would have given you the opportunity to make money in 2008 when the stock market lost over 35%. This strategy was designed in 1973 by Harry Browne. Based on the backtesting of past market data, not actual client returns, we believe you would have made money in 41 years and lost money in 6 years with the largest annual loss being approximately 7%. The limitations of backtesting are fully explained in our disclosures.
This allocation endeavors to provide growth and income while controlling volatility. We attempt to prevent you from being subjected to the wild crazy swings in the stock market that cause people to lose their life savings. These assets are always present in the portfolio in a balanced way, no matter what is going on in the economy. They are designed to offset each other so that a majority of the assets in the portfolio might rise no matter which economic cycle the economy is experiencing.