5 reasons to consider ProActive Management Buy and hold is dead(ly)—While bull market runs are impressive, history shows it is not a matter of “if” but more a matter of “when” the next bear market will occur to wipe out much of the gains. During a “bear” market the investor will lose money. During an average “bull” market about half the time is spent recovering bear market losses, the other half registering “real” gains. Think what could happen during bull markets if the investor can keep the losses low. Investment expert Kenneth Solow sums it up: “Patiently waiting for stocks to deliver average returns do not rise to the level of an investment strategy.” Bear market losses are exponential—It takes longer than most investors think to recover from bear markets—a gain of 50% is needed to overcome a 33% portfolio loss. Safety first: always—No one would ever jump into a motor vehicle without an accelerator and brakes, so why would investors even consider having an investment vehicle that doesn’t have both? Proactive management aligns with investor psychology—Behavioral finance studies have documented that investors are twice as worried about loss as they are about gains. Does “set it and forget it” really make sense?—Isn’t the first rule of investing “Buy Low and Sell High?”
