Broker Check

November 2016 Perspective: Half and Half

November 15, 2016

This month’s Perspective comes from Ed Easterling, the founder of Crestmont Research on what is perhaps the most important concept in investing: cumulative returns.


Cumulative returns are the only returns you get to spend. Period. The opposite, transient or break-even returns, are worse than mathematically meaningless, they contribute no economic progress toward your goals AND they cost you precious time. Playing catch-up has a cost, but the reality is all investments move up and down in value. As an investor there will inevitably be time where you find your portfolio recovering, or catching up, to break-even with some higher value it held in the past. Wouldn’t it be nice if you could reduce the time you spend playing catch-up and increase your ability to generate higher cumulative returns as a result?  


Ed walks us through the math and explains how diversified, low volatility strategies can really help you make progress toward your goals. Some of this may sound very familiar. We hope you enjoy this month’s perspective:


Half & Half: Why Rowing Works (updated).


When you find yourself at a point where break-even returns are probable, what should you do? As Ed says, reach for the Half and Half. In other words, reduce volatility to generate positive cumulative returns over time.  After you read Ed’s article, ask us about the Up Capture and Down Capture percentages for the Rowing strategy in your portfolio. We think you’ll be pleasantly surprised.