Tactical Investing Works
More than 25-years of experience and success.
Since May 1993, Thornmark’s Consolidated Performance, net of all fees and expenses, outperformed its Consolidated Benchmark and the S&P/TSX Index (Toronto stock market) by more than 27%.* Tactical investing has worked through cyclical ups and downs, to both grow wealth and to help protect you from large losses. We understand the pain of losses when markets fall is worse than the joy of gains when they rise.
Designed to grow and protect your wealth, tactical investing at Thornmark protected clients during the worst market collapses since the Great Depression – the Tech Wreck in 2000 and the Credit Crisis in 2008 – by dramatically mitigating losses experienced by the market. Consolidated Performance during these market declines was significantly better than either the Consolidated Benchmark and the S&P/TSX.
Tactical Investing Explained:
1. Tactical Investing Grows and Protects Wealth
Investment success isn’t just about simply making money; it’s about making it and not losing it! It’s easy to make money in a rising market, but it’s hard not to give it back in declining markets. This challenge means strategies must adapt to changing economic conditions.
Thornmark’s tactical investing is designed to perform well, in both up and down markets. Developed in the early 1990s, Thornmark tactically increases risk (equity exposure) when economies are growing and reduces risk during recessions. This tactical approach helps to avoid large losses associated with strategic or index investing. Tactical investing is designed to provide clients with smoother wealth accumulation.
2. Tactical Proof
Between May 1993 and December 2017, Thornmark’s Consolidated Performance, net of all fees and expenses, exceeded its Consolidated Benchmark and the S&P/TSX Index by approximately 30%. This gain was generated while avoiding much of the two worst market declines since the Great Depression, giving investors a smoother wealth accumulation path.
During the Tech Wreck in 2001, Thornmark’s disciplined approach protected clients. Consolidated Performance was down only 14.2% peak-to-trough, which compares very favourably to the Consolidated Benchmark loss of 43.2%. During the Credit Crisis, Consolidated Performance was down only 12.6% peak-to-trough, which was 47% better than the Consolidated Benchmark loss of 23.7%
3. Tactical Math
Aversion to large cyclical losses is mathematically intuitive. Larger losses are exponentially harder to recoup. For example, a 15% loss is recouped with an 18% gain. Alternatively, a 50% loss requires a 100% gain to break even. Recouping large losses is hard. Put another way by Warren Buffet, “the easiest way to make money is to not lose it”.
Thornmark adjusts portfolio risk levels to changing market conditions. The changes are designed to produce smoother, less volatile performance, and peace-of-mind for restful nights. Thornmark’s tactical investing focuses on stock picking during economic expansions and aims to avoid large losses through intelligent asset allocation during recessions.