In a nutshell:
Adapting Tactical and Absolute Return Strategies, which us risk management can, under the right circumstances, out perform and potential reduce losses more than traditional buy and hold / benchmark strategies during weak cycles.
- The past 200 years of stock market history show that weak performance periods follow strong periods
- The last strong cycle finished in late 1999
Strong Cycles
Time Period Annual Average Return Duration
1815-1835 10.0 % 20 Years
1843-1853 13.7% 10 Years
1861-1881 12.0 % 20 Years
1987-1902 15.2 % 5 Years
1921-1929 25.2 % 8 Years
1949-1966 14.0 % 17 Years
1982-1999 14.9 % 17 Years
Average 14.9% 17 Years
- Weak periods have lasted up to 20 years
Weak Cycles
Time Period Annual Average Return Duration
1802-1815 + 2.7 % 13 Years
1835-1843 - 0.6 % 8 Years
1853-1861 - 3.0 % 8 Years
1981-1897 + 3.9 % 16 Years
1902-1921 0.0 % 19 Years
1929-1949 + 0.8 % 20 Years
1966-1982 - 1.4 % 16 Years
1999-???? ??? % ?? Years
Average 0.0 % 16 Years
Two simple questions every investor should be asking themselves:
- Can I take another 3-5 years of negative to flat performance and still reach my financial goals?
- Do I have the same confidence as I did before 2000 or 2008 in my current investment approach?
If you answered NO to either of these questions consider using an absolute return and or tactical approach in your investment strategy.
Weak and Strong Market Cycles is research by Robert Powers and Sy Harding Market Cycles Study. The Table above summarized Powers' interpretations of strong and weak cycles, along with average annual returns adjusted for inflation and duration of the cycle.
Shout if from the mountain tops.
What's the right portfolio for you or your clients? Provident Capital offers 4 portfolios that one can select that seek to replicate the risk and return characteristics of our Absolute Indexes. 
