What size gain is needed to recover from a big loss?

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Hi,

Warren Buffett is arguably the world's greatest stock investor. He’s also a bit of a philosopher. His most famous quote is:

"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

So why be tactical?

One reason is to save your clients from catastrophic losses – losses that cannot be recovered in a reasonable amount of time.

Intuitively, your clients know losses are bad, but they may not fully understand the potential long-term impact of large portfolio drawdowns. How long it might take to get back to their high-water mark.

The chart below tries to help with that discussion. It shows what percentage gain is needed to get back to break-even after a loss.

Suffering large losses is emotionally draining. Moreover, massive gains are needed to recover from those losses. Do you want to put your clients through that emotional rollercoaster? Do your clients have that kind of time to wait to get back to their high-water mark?

Just remember this: After the Tech Wreck of 2000-2002 when the Nasdaq 100 dropped 80%, it took over 16 years to get back to breakeven.

Don’t let your clients live through a similar nightmare. The use of tactical strategies can help actively manage downside risk and potentially avoid those catastrophic losses.

Optimus Advisory Group manages liquid tactical and alternative investment strategies that meet the needs of our clients. We use a disciplined, quantitative methodology to build and manage our portfolios.

Over a full market cycle, these strategies are designed to provide superior risk-adjusted returns while maintaining a low-correlation to traditional market indices.

All strategies are net results after subtracting a 1.50% annualized fee.

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(877) 885-7468

info@optimusadvisory.com

Disclosures

The performance results shown include the reinvestment of dividends and other earnings. Comparison of the Optimus Advisory Group Programs to any other indices is for illustrative purposes only and the volatility of the indices used for comparison may be materially different from the volatility of the Optimus Advisory Group Programs due to varying degrees of diversification and/or other factors. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. Optimus Advisory Group does not make any representation that the Optimus Advisory Group Programs will or are likely to achieve returns similar to those shown in the performance results in this presentation. Optimus Advisory Group reserves the right to trade different funds within their models.

The historical S&P performance results (and those of all other indices and index funds used as proxies for indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual client or prospective client in determining whether the performance of the Optimus' portfolio meets, or continues to meet, his/her investment objective(s). It should not be assumed that any Optimus portfolio holdings will correspond directly to any such comparative index.

Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investment strategies devised or undertaken by Optimus Advisory Group) will be profitable for a client's or prospective client's portfolio. All performance results have been compiled solely by Optimus Advisory Group and have not been independently verified.

Performance results reflect hypothetical results that were achieved by means of the retroactive application of a back-tested model and, as such, the corresponding results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of each of the above referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually manage client assets; (3) for various reasons (including the reasons indicated above), clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model.

The Optimus performance results do not reflect the impact of taxes.

Advisory Services offered through Optimus Advisory Group, a Registered Investment Advisor.