When it comes to investing your hard earned dollars, managing the risks with quality information is the key to your success.  So why is it so important to have the right information at the right time?  Simply put, bear markets happen!  They happen to all investment assets and are usually spaced just far enough apart to lull the uniformed/misinformed investor into thinking that what he's investing in will never go down.  Oh, it'll eventually go down and when adjusted for the effects of inflation, the losses of both time and money can be devastating.

Let's take a look at the various market downturns that have left most investors wishing they had gotten out while the getting was good.

~ The Equities Market ~

Returns shown in the table below exclude dividends.  During these periods investors were rewarded with a 5.9% average annual return using interest-bearing cash holdings compared to an average yield of 5.6% for stock dividends.  The stock market should never be invested in solely for its dividend income.  Real gains come from price appreciation only!

U.S. Stock Market Long-Term Bears
Dates	Duration	Actual Return	Inflation Adjusted Return
December 1809 to July 1819	9½ years	-21.0%	-29.7%
May 1835 to January 1843	7¾ years	-56.5%	-54.1%
December 1852 to October 1857	4¾ years	-64.6%	-68.8%
May 1872 to January 1885	12¾ years	-18.3%	1.0%
September 1899 to August 1921	22 years	-19.4%	-68.4%
September 1929 to April 1942	12½ years	-75.6%	-73.6%
November 1968 to August 1982	13¾ years	-7.1%	-69.0%
March 2000 to  ?	?	?	?
As measured by the S&P Composite - 1798 to 1899, Dow 30 - 1899 to 1949
S&P 500 - 1949 to 1980, Wilshire 5000 - 1980 to present

 

~ The Fixed Income Markets ~

Even the most conservative of investments have been affected by bear markets.

Bears of the U.S. Bond Market
Dates	Duration	Actual Return	Inflation Adjusted Return
1941 - 1943	3 years	6.4%	-14.9%
1946 - 1948	3 years	3.7%	-25.1%
1950 - 1952	3 years	2.8%	-8.6%
1955 - 1959	5 years	2.7%	-6.1%
1965 - 1969	5 years	2.9%	-13.7%
1973 - 1974	2 years	6.1%	-11.4%
1977 - 1983	7 years	61.5%	-12.8%
As measured by 65% 5 year government bonds/35% 20 year High-grade Corporate Bonds - 1926 to 1991
Lehman Brothers Aggregate Bond Index - 1992 to present

 

Bear Markets of "Risk-Free" Cash Holdings
Dates	Duration	Actual Return	Inflation Adjusted Return
1862 - 1864	3 years	19.5%	-42.3%
1916 - 1920	5 years	31.0%	-41.4%
1934 - 1952	19 years	9.7%	-45.6%
1974 - 1980	7 years	66.1%	-11.0%
2002 - 2005	4 years	4.5%	-5.6%
As measured by the U.S. Short-Term Interest Rate: Economic History Services Ordinary Funds, Contemporary Series - 1831 to 1925
30 day U.S. Treasury Bills - 1926 to 1991
Average money market mutual fund - 1992 to present

 

~ The Alternative Investment Assets ~

Under "normal" market conditions purchasing a home for the long-term makes good sense but venturing out and making speculative investments in a "hot" real estate market is another thing entirely.

Average U.S. Real Estate - Peak to Decline to Full Recovery Periods Since 1964
Dates	Duration	Actual Appreciation	Inflation Adjusted Return	Combined Inflation and *Mortgage Cost Effect
May 1966 to September 1968	2¼ years	0%	-7.7%	-18.1%
June 1969 to March 1971	1¾ years	0%	-8.0%	-24.2%
July 1973 to December 1975	2½ years	0%	-18.7%	-31.5%
March 1979 to January 1984	4¾ years	0%	-30.7%	-58.0%
January 1989 to July 1993	4½ years	0%	-15.8%	-47.1%
January 2006 to ?	?	0%	?	?
*Mortgage cost is interest payments based on the the average 20% down/30 year fixed home loan.
Additional expenses (not included) such as closing costs, property taxes, and insurance would increase these negative results.

 

Markets of the most basic of materials have also had their run in with the mighty bear.

Long-Term Commodity Bears
Dates	Duration	Inflation Adjusted Return
1918 - 1932	15 years	-46.9%
1949 - 1971	23 years	-20.5%
1981 - 2002	22 years	-34.0%
As measured by the Producer Price All Commodities Index - 1913 to present

 

Throughout the years gold has been called "the safe haven" and "a hedge against inflation."  Well, those investors that were caught up in the frenzy of late 1979 and early 1980 ended up suffering through what can only be referred to as "the mother of all modern day bear markets."

The Golden Bear
January 1980 $850.00 to July 1999 $252.80	19½ years
Actual Return	-70.3%
Inflation Adjusted Return	-85.9%
As measured by the London Gold PM Fix in U.S. dollars - 1972 to present

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   The Risk of Underperformance  

As you can see the investing environment isn't always "party time" like the Wall Street subsidiaries, i.e., the banks, brokerage firms, insurance and mutual fund companies would lead us to believe. These institutions spend billions of marketing dollars every year pitching their expensive buy and hold schemes. The upbeat, everything-is-a-bull-market advertising is to get you sucked in, then when times get difficult they switch to the "ride the market's ups and downs and stay the course." You see Wall Street operates on commissions and fees, the more you buy (regardless of price) the better, the longer you hold (regardless of market downturns) the better. All the best for them as they make money whether their clients do or not. Case in point, can you imagine being sold into a stock mutual fund and told to hang onto it for the long haul, then in a matter of ten years you lose 99% of your money? That would have been the result if you had invested in the Ameritor Investment Fund from 1997 to 2006. Now get this!  The fund is still looking for new investors.

Here are a few more examples of the worst stock mutual funds on the planet that currently want your money.

Fund Name	10-yr. Annualized Return
Frontier Microcap	-27.79%
American Heritage	-23.10%
American Heritage Growth	-15.11%
Apex Mid Cap Growth	-10.01%

And this is just the tip of an ugly iceberg.  In fact, as of September 30, 2007 the number of stock and bond funds, both load and no-load, currently open to new investors that have underperformed the markets for all the periods of one, three, five and ten years stands at 2,632 with front loads as high as 8.50%, back loads as high as 6.00% and expense ratios as high as 18.40%.  We're talking about mutual funds from some of the most well known fund families and more than 14% of the 18,653 funds examined here at You Capitalize!  So how do they stay in business?  Sales gimmicks!  If you talk fast enough using fancy charts, dressed in a fancy suit, while sitting behind a fancy desk, inside a fancy building, you could, as they say, "sell ice to an Eskimo."

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   Time Spent Wisely = Money  

These days, in the midst of the information age, your ability to access opinions and prognostications on the markets is unprecedented.  At the same time we are in an era in which so many seem to have lost their moral compass.  On a daily basis investors are bombarded by slick-talking salesmen, loud-mouth commentators in the media and just plain fountains of misinformation at every turn.  Why do they go to so much trouble to get their message out?  They've  either got something to sell for big commissions and fees.  Or they are trying to pump up the price of something they already own so they can sell it for a profit.  Or maybe, they have a show to put on, and they'll do or say all they can to get higher ratings in order to sell commercial time at a higher rate which in turn the advertisers that buy that time attempt to get you to buy what their selling.  Seems like an utter waste of your time, doesn't it?

We're not about to waste your time with sly hidden agendas nor insult your intelligence, by promising you, really big, fast, crazy mad money.  Our business since day one is all about taking a realistic view of the markets.  We analyze them inside and out, each and everyday.  We then show our subscribers how best to position themselves to take advantage of the opportunities as they arise, while keeping their expenses to a minimum.

Our company is called You Capitalize LLC and our home office is located right here at YouCapitalize.com.  Though we'd love to meet with and shake the hands of all our subscribers, it just doesn't make sense to support branch offices, carry a large payroll or sponsor one of those silly seminars/workshops, all of which would nullify us as the premier low-cost financial information provider.  We use this venue exclusively thus we're open for business 24/7 and can be accessed from anywhere in the world.  So whether you're investing for retirement, current income or higher education expenses, a quick check of the site each trading day is all it takes to be a successful Capitalizer.  After all, your financial future is far too important to blindly leave it in someone else's hands.  It's time for you to take control.  Make it happen!