HenryWirth.com Beating the Market since June 2001 How Risky is a WEIMERandWIRTH portfolio? How much should a True Believer invest in a WEIMERandWIRTH portfolio? I am having a difficult time determining a reasonable and proper amount to allocate to GroMo investing. This appears to be a common problem. One of our members wrote: Logic would say to put all my stock capital into GroMo, but I am reluctant to do that. I too am reluctant to do that even though the return of my GroMo portfolio was more than three times the return of my remaining stock portfolio over the last five years. The BIG question is: How risky is GroMo investing relative to the market? The primary reason I invested my money in Growth and Momentum stocks was that during the correction that began in 2000, the WEIMERandWIRTH system produced positive results while everything else was crashing. Will it always work that well? Only "The Shadow" knows, but just because WEIMERandWIRTH weathered one nasty correction does NOT mean it will handle the NEXT correction as well. My advice is to be emotionally AND financially prepared for a nasty 50% correction at all times i.e., make plans for a disaster; if you do then you may be able to survive and recover. How risky is WEIMERandWIRTH relative to the S&P 500, or anything else? There are many ways of quantifying risk, but I am fond of saying that one will never know how risky anything is until it’s much too late to do anything about it. The most popular methods of quantifying financial risk measure the volatility of a portfolio. If volatility occurs while the market and the portfolio are rising then most investors will claim they are in this game for the “long term” (whatever that means). When the market starts testing new bottoms it’s a different story. That’s when everyone starts to head for the exits. So, the questions that are really begging for answers are: How risky is a strategy when the market is falling? And, more importantly, how much of a loss can YOU tolerate before you start heading for the exits? Regardless, here's some data that should enable you to assess the risk of WEIMERandWIRTH relative to the S&P 500. It is now January 2009 and I have 7-1/2 years of performance data for WEIMERandWIRTH. We are currently in one of the most brutal bear markets since the great depression of the last century, during which the Dow Jones Industrial Average lost 90% of its value. From June 30, 2001 thru December 31, 2008 The S&P 500, including dividends, LOST a total of 15.9% or 2.3% per year. WW, excluding dividends, GAINED a total of 296.3% or 20.2% per year During its worst quarter (2008Q4) the S&P 500 lost 21.9% During WW's worst quarter (2008Q4) we lost 24.3% During its worst year (2008) the S&P 500 lost 37.0% During WW's worst year (2008) we lost 41.4% WW's worst quarter relative to the S&P 500 was 2008Q1 WW lost 18.1% and the S&P 500 lost 9.5%. WW's best quarter relative to the S&P 500 was 2002Q2 WW gained 8.0% and the S&P 500 lost 13.4%. That is absolutely phenomenal, but remember what the experts say about past performance. Regardless, if WW can continue to maintain that level of outperformance then… To be continued… Return to Home Page