Broker Check

Family Index Stress Test

Investors lost $30 trillion in market value during 2008, according to Bloomberg1. How much of that was yours?

The recent bear market was just the latest in a long string of market declines that have pummeled family finances. Here are a few examples:

  • From early 1973 to late 1974, the S&P 500 Index lost nearly 50%.
  • In just 10 trading days in October 1987, it plunged 31%.
  • During the 2000-2002 bear market, the widely watched index lost nearly 50%.
  • From the October 2007 peak to the March 2009 nadir, the S&P 500 lost more than 50%.

Clearly, devastating declines in the stock market happen with frightening frequency.

There are some people who believe that the best investment strategy is to simply buy a diversified portfolio and hang on to it for dear life (and for years) through the roller-coaster markets.

We believe that buy, hold, and hope for the best is not an investment strategy. It’s a train wreck.

Billionaire investor George Soros said, “It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.” Nobody can predict the future, but there are sensible proactive risk management strategies that investors can implement to help limit their exposure to these massive market meltdowns. Remember, a 50% loss means you need a 100% return to get back to break even. That’s a tall order in any environment.

One of the tools we use at DAE Capital, LLC to help investors assess the risk in their portfolios is the Family Index Stress Test®. We've identified seven economic scenarios that we believe have some chance of occurring over the next few years. Based on these scenarios, we “stress test” your portfolio to help determine where it may be vulnerable. Based on this analysis and our investment process, we then offer suggestions on how to restructure your portfolio.

The world is changing fast and this test can help highlight where your portfolio might need to change, too.

It’s free and completely confidential.