Why Losses are PERMANENT
If you think you already know everything, don't read this post
The financial service industry told clients for decades that “losses are temporary.” That is a LIE.
Professionals know losses are permanent.
Three Undeniable Facts
First rule of investing is anything can happen.
The financial industry values every account to the market everyday.
Circumstances can require a client to liquidate assets.
For these reasons we need to respect losses to a greater degree.
Simple Example
An account grows 44% over 14 months and is worth $100,000 at the top of the market. Over the next month it declines 35%, and the account has $65,000. The $35,000 loss was permanent.
Over the next 4 ½ months the account returns to $100,000 and the financial advisor tells their clients, “See. I told you it would come back.”
The Real Story
At the bottom the account has only $65,000. Over the next 4 ½ months the client did not get back their money, they got a 54% return on $65,000.
Professionals, sold when support broke, at the first 5% decline. They reentered when the breakout of the bear channel occurred. Professionals received a 40% return on $95,000. When the market returned to its previous high they had $133,000 in the account.
BTW, the example above is the 2020 crash. But the same is true for ‘87, ‘90, ‘97, ‘00. ‘08, ‘15, ‘22, and ‘24.
NOTE: Not only did the client loss 35% of their capital permanently, the advisor lost 35% of their revenue permanently.
Stop saying losses are temporary.
The losses over the last four decades have amounted to almost 300%. Just imagine if your clients had that 300% of there assets back and a the advisor had the 300% of revenue back. This does not even include the growth on the 300% over the last four decades. That is why hedge funds create billionaire and banks, brokerage firms, and mutual funds do not.
Avoid losses.
In 2020 the Mastermind Group avoided 90% (on average) of the 2020 drop. The newest members avoided 65%, the best avoid 117%. The same is true for every correction since 2008.
This is the power of Entering and Exiting like a Pro. My last five posts show how Professionals enter and exit the market. The questions they ask protect clients assets, increase profits, and REDUCED RISK.
Every few months we open the Mastermind Group and add a new members and help them begin to trade like a Pro.
Schedule a call to learn more about this elite group and their extraordinary results.
NOTE: New posts will be on the second and fourth Tuesday of the month.
If you want to learn about this and more I have two resources for you:
- Online Self-Paced Course: Trade Like A Pro (TLAP) course. Learn to trade like a Professional at your own pace. Read the testimonials here.
- Group Mentoring: Join the Mastermind Group and get the TLAP course for free.
Be well and trade like a pro,
Lloyd
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