It’s defense that ultimately wins games, but that’s an easy thing to sometimes forget.  As can be seen in the graphic below, minimizing the damage done by market declines can have a much bigger effect on long-term wealth than capturing all of the market’s available return.  It also makes it so much easier to stay in the game.

Investors – but particularly those either in, or approaching, retirement need to realize this.  They have neither the time to recover from serious portfolio declines, nor likely the stomach to weather such an event.  The psychological damage inflicted on investors during full bear markets can be devastating if their portfolios have no systematic risk control.  What usually happens is that there is a moment of panic, the plug is (understandably) pulled, and portfolio losses are locked in.  Often forever, as the hot stove is never touched again.

Don’t let this happen to you.  Our approach to managing market risk and hopefully avoiding this untenable situation is highlighted extensively throughout this website.  If you like to know more, or simply have a conversation about this matter, please let us know.  We’d love to hear from you!

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About the Author

Joseph “Bo” Billeaud is the founder of Billeaud Capital Management. After earning a BS in Chemical Engineering (University of Louisiana, 1979) and while working in industry for seventeen years, Bo developed the market risk-control models and investment philosophy that undergirds all BCM portfolios. Since effecting a formal career change in 1996, Bo has helped BCM grow into a respected asset management and financial planning firm currently overseeing $400+ million dollars for individual, corporate, trust, retirement and 401(k) accounts…. Read more.