Risk Management, Why it Matters
Most investors are familiar with the concept of Compound Interest and how it increases returns over time. It is one of the simplest but most powerful forces in all of investing. However, most investors fail to realize the damaging power of “reverse” compounding. For example, a -20% loss requires a gain of +25% to get back to even. However, in a more severe bear market like 2000-02 or 2007-09, the S&P 500 can lose -50% or more – which requires a +100% gain to fully recover!
As losses become more extreme, so does the effect of reverse compounding. We believe that minimizing the portfolio effects from these extreme bear market downturns is the key to long term financial success.
We would be happy to provide you with more information about The Stanton Group WP, and our risk management process.
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John Stanton is the founder of The Stanton Group WP | Seacrest Wealth Management, LLC. With more than three decades of experience in the financial services industry, he serves as an advisor for clients, focusing on financial planning and the investment strategies to support their financial plan. Based in Naperville, Illinois, John serves clients in Naperville, Plainfield, Darien, and throughout the state. Learn more about John by connecting with him on LinkedIn. You may reach John Stanton at 630-445-2380 or email JStanton@seacrestwm.com.
The Stanton Group WP provides investment advisory services through SeaCrest Wealth Management, LLC (the “SWM”), a registered investment advisor. SWM is a registered investment advisor (“RIA”) with the U.S. Securities and Exchange Commission located in the State of New York. SeaCrest Wealth Management, LLC can be reached at (914) 502-1900.
Certain assumptions may have been made in the preparation of this material as at this date, and are subject to change without notice. This is not an investment recommendation or a solicitation to become an investor in a pooled fund and/or a separate account managed by the Firm. Unless indicated, these views are the author's and may differ from those of the firm or others in the firm. We do not represent this is accurate or complete and we may not update this. Past performance is not indicative of future returns.