How To Protect Your Wealth With A Globally Diversified Portfolio
Let’s face it.
Investing is a very hard gig.
The world economy has gone through dramatic shocks over the last two decades.
Based on misguided policies by a majority of the world's central banks, asset prices have been and continue to be in a continuous cycle of short-lived booms, followed by ruinous busts.
Has your retirement fund performed poorly over the last decade?
There is no stability as you watch your net worth oscillate from year to year, and it seems like every several years, there is a major catastrophe affecting the financial markets.
The Asian Financial Crisis.
September 11 and the Technology Bust.
The Subprime Crisis followed by the Global Financial Crisis.
The Eurozone Debt Crisis.
Fears of a Chinese Slowdown and the Commodity Bust.
Investment bankers, market strategists and other so-called “experts” are failing to live up to their reputation, disappointing clients like you.
Are you exhausted with excuses regarding poor performance that your wealth advisor delivers at the end of every financial year?
While at the same time continuously charging higher and higher fees?
In light of the all the financial shocks and economic downturns your portfolio has experienced in the past two decades, it isn’t surprising that you are worried about:
- your retirement plan
- preserving your wealth
- generating sufficient income in a low-interest rate world
- maintaining your quality of lifestyle
- saving for the college fund
How Financial Crises Have Affected Your Wealth
In the middle of the '90s, Asia was developing rapidly and experiencing booming economic conditions. The so-called Asian Tigers were the “hot tip” every banker was discussing over the phone with their clients.
However, by 1996 emerging economies such as Brazil, Russia, and China — including the majority of Asian countries — got into financial trouble and by 1998 there was a full-blown financial crisis.
Assuming you followed the banker's advice and invested in one of the Asian Tigers — Singapore for example — your investment would have suffered significant declines.
Your portfolio of $100,000, invested in Singapore shares at the beginning of 1996, would have declined to $40,000 by the end of 2002, some seven years later.
At one point, the value of the portfolio would have declined by a staggering 74%!
There was nowhere to hide.
Hong Kong’s property market crashed in 1998 and continued to decline all the way into 2003. Your condominium purchase of 500,000 US Dollars at the beginning of 1997 was worth no more than $200,000, close to a decade later.
There was no difference whether your portfolio held financial markets such as shares, tangible assets such as real estate or just outright cash in an offshore bank account.
The Japanese Yen is a G3 currency recognized for its stability and is sought after during times of economic stress. It is usually known as a “safe haven” in the world of finance. However, there was nothing safe about the Yen or for that matter the Singapore Dollar, Malaysian Ringgit, Thai Baht and many other local Asian currencies during that period.
Your personal offshore bank account, term deposit or saving scheme held with the purpose to diversify yourself would have been decimated in 1998.
By the late 1990s, financial advisors and investment bankers eventually jumped on the TMT group-think (Technology, Media & Telecoms), recommending clients like you, to purchase as many shares in this industry as possible.
It is the paradigm shift towards a new economy, they claimed.
Despite the fact that a lot of these companies weren’t making a single dollar of profit, the public went into a buying frenzy and one of the greatest bubbles in modern history developed.
Had you followed similar recommendations to buy internet companies in the late '90s, as plenty did, you would have initially seen your $100,000 portfolio double. Undoubtedly, this would have created a positive reaffirmation bias, which would, in turn, make it significantly more difficult to sell down the road.
Four years later, your $100,000 portfolio would have been worth only $40,000 — a decline of 60% from your original investment. Even more importantly, it would have been a mind-blowing 83% decline from the peak of your portfolio’s net asset value (NAV) in the year 2000.
In the early 2000s, the Federal Reserve responded to this crash by slashing interest rates. This sparked unnerving credit growth, which would last for several years.
It was sowing the seeds that would eventually turn into the Subprime Credit Bubble and lead us down the road towards the Global Financial Crisis of 2008.
In 2006 just as US real estate prices were peaking, The Federal Reserve Chairman was interviewed by a prominent media channel, where he was quoted saying:
It's a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis.
Ben Bernanke (ex-Chairman of the Federal Reserve)
And we all know how that turned out.
Within the community, financial advisors look up to central bankers. Undeniably, they would have recommended clients like you to remain fully invested in the housing market.
The nationwide average price of a detached home in the United States purchased at the start of 2005 for around 500,000 US dollars would have been worth $420,000 some eight years later.
However, the chart above doesn’t reveal the whole economic story, including the pain suffered by millions of households not only in the US — but across the world.
Despite the fact that property prices were peaking by early 2006 and declining rapidly by mid-07, confidence on Wall Street was sky-high. Stock markets were reaching record highs, while banking bonuses were making front page news.
Various sentiment measures across the financial community were showing that economists, fund managers, and advisors were extremely optimistic for the coming year.
Several of my current clients remind me of the stark predictions and absurd promises their past advisors were feeding them at the time, on a regular basis. If you held US stock securities in the value of $100,000 around early 2006, your portfolio would have risen by 20% in the first 18 months, followed by a 50% crash in the subsequent 18 months.
The worst stock market crash since The Great Depression.
As hard as it is for American families to believe, the Great Recession of 2008 was even more prominent across the Atlantic. European jurisdictions entered severe economic slowdowns and the existence of the European Union has come into question on many occasions.
Europe's affluent and wealthy have their favorite spots to purchase holiday homes, but none were more popular than Spain.
By the middle of the 2000s, signs became apparent that the Spanish residential housing market was overheating, mainly due to debt-financed speculation. Your 500,000 Euro investment in a Spanish condominium in early 2006 would currently only be worth slightly higher than €400,000.
One of the worst property market crashes in European modern history.
Last but not least, let us remember the army of Wall Street strategists flying around the world conducting Emerging Market research. Everyone was looking for the next hot economy that would grow at a rate double or triple that of the United States and Eurozone.
The Goldman Sachs head economist glamorized the overall sector in the mid-2000s, by coining the phrase BRIC — referring to Brazil, Russia, India, and China. The four growth engines that were apparently going to save the global economy in the aftermath of The Great Recession.
Wall Street was experiencing record inflows of money into Emerging Markets and the BRIC investment theme.
Had you invested $100,000 into an index holding BRIC share securities, like many others did, a decade later you would have been immensely disappointed. Not only would you have lost 30% of your holdings and watched the rest be eaten by inflation — think of all the opportunities you missed out on with this dead-money portfolio.
There Is A Better Way
When we consider all the crises over the last two decades, if your portfolio or retirement fund is breaking even, you’ve actually done better than the majority.
Nevertheless, it's totally understandable that you are probably disappointed with such performance.
You deserve better.
You deserve more consistent returns for your hard earned savings.
And you deserve to pay less in costs and taxes while you're at it.
Putting your trust into the hands of a short-sighted and sales-oriented financial advisor will cost you an arm and a leg in annual fees. Furthermore, these guys will usually recommend you an investment that looks good today, but will surely disappoint you in the years to come.
Should you just give up on investing altogether and sit on your cash?
In a yield-starved world where Developed Market banks pay you zero percent for your savings, being overly risk averse and letting your money sit in cash means inflation is slowly eating away at your purchasing power.
We can see the wrong way to invest, as the Wall Street machine works hard to part you from your hard-earned money.
But what is the right way?
Atlas Investor Portfolio
The right way is a tailored investment strategy, where we sit down and specifically customize a portfolio for your personal goals and objectives.
After 13 years of experience being an investor, I’m happy to be able to share with you a unique style of investing. The best part of all is that it's proven to work for over 70 years.
Your portfolio should be in line with your risk tolerance, utilizing both passive and active strategies, so that you can hold it indefinitely and sleep well at night without worrying.
Passive investing done the right way means global diversification and careful risk adjustments to construct a well-balanced portfolio.
Active investing is where I use my experience and refined investing skills to manage your portfolio favorably over a 12-month time frame. I either overweight or underweight various components of the portfolio so that you can outperform the market.
This method of mixing passive and active strategies produces solid historical returns, with far lower risk than holding any single asset class on its own.
Atlas Investor Portfolio asset allocation mix includes:
- developed market stocks
- emerging market stocks
- frontier markets stocks
- government bonds
- emerging market bonds
- corporate bonds
- high yield bonds
- bank loans
- inflation-linked bonds
- global commercial real estate
- private equity investments
- precious metals
- high yielding currencies
- master limited partnership
So instead of me describing it in any more complexity, let me show you how its performed over the last 20 years.
The end result is lowering of risk together with global diversification to achieve a very solid performance.
The Atlas Portfolio has a volatility measure of only 14%, which is 25% less than US stocks.
Lower volatility means your overall portfolio oscillates less, whereas the stock market tends to dramatically swing up and down. This downside protection results in your portfolio declining less, while recovering quicker.
The Atlas Portfolio is globally diversified both asset wise and geographically.
Most investment professionals would agree that diversification is insurance against uncertainty and a very important component of managing risk. By spreading your bets across assets and regions, you won’t be totally exposed to any given crisis.
The two-decade comparison above shows Atlas Portfolio has returned almost 9.25%, while US Stocks have managed to achieve around 7.5% return.
Albert Einstein is quoted as saying that “compound interest is the eighth wonder of the world.” When you earn a higher rate of return and remain invested for longer periods of time, you can truly see your money grow.
The Atlas Investor Portfolio goes a step further and accomplishes the difficult task of higher returns, with less risk. In the finance world, this is known as a better risk-adjusted return.
Stress Tested Throughout History
The Atlas Portfolio has been stress tested throughout our modern financial history.
Historical backtesting means using a strategy that has worked in recent years and stress testing its performance over the last several decades. While past performance is no guarantee of future returns, I have done the hard work of analyzing my strategy over many economic conditions and financial cycles.
This increases your probability of achieving consistency.
The Smarter Way For You To Invest
Like I said, investing is a really hard gig.
You just never know when the next crisis is around the corner and if you aren’t careful — you could see your portfolio sink by 50% or more!
You need someone with many years of experience and decades of historical knowledge. I’ve got the right tools at my disposal to help you stop losing money, grow your wealth and maintain your lifestyle.
And best of all Atlas Portfolio is fully customizable to suit your risk tolerance and return targets.
I can also tailor the portfolio so its central focus is either on passive income production, growth with higher returns or alternative asset inflation hedge.
It’s time for you to start investing the smart way.
If you would like to know more get in contact by clicking below, filling out the brief survey and I’ll get back to you within 24 hours.