Jeff Diercks'  Instablog

Jeff Diercks
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Jeff Diercks, is an investapreneur and recovering CPA. He actively trades his own money and manages the assets of a select group of clients at InTrust Advisors, a Tampa, Florida based wealth management firm focused on trend following and price momentum strategies utilizing ETF securities. Mr.... More
My company:
InTrust Advisors
My blog:
InTrust Advisors
My book:
www.Stock-Signal.com
  • Surprising Chart Shows Equities Rock Most Years! 0 comments
    Jul 30, 2013 2:18 PM

    I was putting together a simple Asset Class Performance chart for the past ten years for marketing purposes and it struck me that for a period where we have been in a secular bear market, stocks (specifically, the S&P 500 have dominated).

    Check out this chart of the past ten years of performance for the following indexes and investment solutions:

    (click to enlarge)

    What is obvious to me is that if you are still hiding in cash, you have missed a pretty good run in stocks, bonds and alternative strategies. Check out the average returns on the right of this chart…not too bad!

    This chart also tells us a few things about the market over this period.

    First, diversifying by investment strategy has a definite advantage over purely buying and holding. I would love to crow about how our sample equal weight portfolio had done using the Stock-Signal.com buy and sell signals, however, it is quite obvious that there are good years and not so good years with this strategy. The best of all worlds is to combine it with other strategies, like buy and hold, to do what we boast about to our wealth management clients…..smooth and enhance returns over complete market cycles.

    Second, bonds are finally being beaten to a pulp in 2013 (year-to-date). However, over the past ten years due to low or declining interest rates this asset class has provided a false sense of security for investors and pretty decent returns. My guess over the next ten years you will see bonds at the bottom of this chart with negative returns more frequently as rates start to rise.

    Finally, trend followers (and strategies that use trend following models like our Stock-Signal.com) have really struggled since the 2007-2008 financial crisis. The reason for this is Central Bank and government meddling in the markets to further their own agendas. This can only last so long and as a betting man, I would be putting my bets on the hedge funds, trend followers and strategies like Stock-Signal.com to outperform over the next several years. Note also the recent trend whereby Stock-Signal and Trend Follower performance is attempting to move up the chart. If this market eventually rolls over, you should see some significant outperformance.

    Now the disclaimers: Past Performance is not indicative of future returns. The Stock-Signal Sample Equal Weighted Portfolio performance is proforma as we do not trade actual dollars on this site. Its performance is before commissions, slippage or advisory fees.

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