EVERY 7-10 YEARS THE STOCK MARKET CRASHES
BETWEEN 30-60%. IF YOU ARE DEPENDING ON YOUR
RETIREMENT ACCOUNTS TO FUND YOUR FUTURE AND
YOUR LIFE, YOU ARE FACED WITH A MONUMENTAL
DECISION EACH TIME YOUR ACCOUNTS FALL:
THE BIG QUESTION: DO YOU SELL?
Option 1: If you don’t sell, you risk deeper losses and greater returns needed to get back to even. If your portfolio loses 25%, you need 33% to get back to even. But if your portfolio loses another 25%, you now need 3 times that amount (100%) to get back to even…that could take years!
Option 2: If you do sell, you now have to be right twice! Did I get out before the
market hit bottom (very likely that answer will be ‘yes’ because only one person sells at the
absolute bottom)? And the more difficult problem: when to get back in?
It is not likely that once you’ve sold that you’ll buy as the market is still falling, so you wait for aurn-around. However, once the market rallies it is now off the lows and seems relatively expensive, so you wait for a pull-back. If and when that pull-back comes, it triggers fear again, so you likely won’t buy until you feel better; however, that only happens when the markets are well off the lows, so again, it is likely to feel too pricey. This cycle can continue for years until the market has rallied so far that you basically missed the majority of the move up and you have no choice but to get back in!
It is one thing to ride out the down-turns when you’re making money and have the time to recover, it is quite another to ride it out when your time is shorter and you can’t replace those losses from your earnings.
But imagine if you didn’t have to make those terrible choices of when to sell and when to buy back in? because unless you are extraordinarily lucky, research says you’ll likely be wrong more often than right (it is not your fault. It is how we are wired as human beings.)
In this eBook we will explain 1 of the 3 investment products that we leverage as part of an overall strategy to almost eliminate all of my client’s risk and still help them outperform 60-80% of the time once their portfolio reaches or exceeds $500k.
WHO AM I?
My name is Stuart Kruse, CFA, and I founded Kruse Asset Management, an independent, quantitative investment advisory firm 13 years ago. What that means is that I am a fiduciary, so by law I must act in your best interests; and all of the investment recommendations are math and statistic-based, so we can show you why the odds are in your favor when we make these recommendations.
Prior to founding Kruse Asset Management, and
after earning an MBA from Kellogg Graduate School in Finance and Game Theory, I started my financial advisory career at two large investment banks: Lehman Brothers and Bear Stearns. In working at those institutions, two things became apparent immediately:
1. Large banks do not have their clients’ best interest at heart,
2. Our entire industry is terrible at what we are supposed to be doing: adding value to our clients’ portfolio.
Why do I say this? Because every year 60-80% of all fund managers underperform their benchmark (or the averages) that they are trying to beat. That’s right, the average fund manager is below average!
THE “SECRET”: STRUCTURED PRODUCTS
Structured products are already created by banks such as JP Morgan, Goldman Sachs, Morgan
Stanley, etc. to create a more predictable payout than if you simply had your funds in the S&P 500 and it was simply tracking that index.
A structured product is like a CD that you’d get at your local bank with a maturity. but instead of getting paid interest, you’d get paid based on the performance of an index like the S&P 500, or the Gold market, or international stocks, etc. The difference being that a structured product makes it so your funds don’t drop the whole way when those indexes fall.
Banks issue dozens of Structured Products each month but the trick is in the math.
The Key Insight: The 1 of 3 Structured
Products Used to Grow Risk Free
The basic version that we use is called a “Principal Protected” Structured Note. Here is how it
works at maturity to ensure payouts are in effect:
-
If the Index is positive, you get the returns of that Index (often even a little more).
-
If the Index is negative, you get all of your money back! (eliminating the client’s risk)
No more worrying about those huge market sell-offs that can decimate your portfolio and make
you wonder if you are going to outlive your money.
Some Structured Products not only give you your money back when the market is down, but will
actually pay you a positive return. Others can pay you a steady stream of interest.
When used as part of a bigger strategy, not only are the odds of losses all but eliminated, but your
portfolio’s volatility will be chopped dramatically and your returns will outperform so that your
portfolio will just march steadily towards your goals over time. No more roller coaster rides and
you’ll be able to sleep better every night knowing that your goals will be met before, during, and
after your retirement.
It has been said that volatility is the price an investor pays for superior returns, but not for our
clients – they have above market returns with below market volatility.
However not all Structured Products that are issued work in your favor. What I have found after
more than 20 years working in the industry are that brokers (anybody at a large bank is a ‘broker’)
usually don’t do the analysis to determine which products work and which don’t.
Furthermore, brokers are paid a commission for selling products (we don’t), thus, they are
motivated by “churn,” or the amount that they can turn-over your portfolio with more transactions.
What we’ve found is that the shorter products tend to be much worse for the client (but good
for the broker), so guess which one the broker recommends (since they don’t have to act in their
clients’ best interests)?
Here’s some more good news.
Not only can I show you how to drastically reduce and even eliminate the risk of loss, I can also show you how to simultaneously outperform the markets more than 60-80% of the time!
With a combination of these strategies that Kruse Asset Management has researched and statistically analyzed you’ll be able to beat most professional fund managers (including your friends) while your nest egg that you worked your entire life for will not only be safer but your future will be brighter and more full of opportunity to do what you want, how you want, when you want!
Here is a link to my calendar to get started:
For the first 10 people we connect with, Kruse Asset Management will provide you with a free
Retirement Cash Flow Analysis so that you’ll know:
1. That your portfolio is setup to ensure you won’t outlive your money
2. That your portfolio aligns with your risk tolerance so you won’t be caught off-guard
by the massive losses in the next downturn.
3. That you’ll know what your options are! (can you retire sooner? Do you have to be more aggressive? Do I have the luxury of being less aggressive to maintain peace of mind?)
Financial Planners will often charge $600-$1,000 for this analysis, but we will provide it as a thank
you for your time to learn how you can Retire Risk-Free with Kruse Asset Management.
Click the link below to schedule a financial planning assessment:
