The Painful Recovery Process

Many savers and investors feel that the markets over the last few years have done irrecoverable damage to their investment portfolios.
In reality many have had their personal wealth decimated by up to 50% and they in many cases are the lucky ones. Technology and telecom investors have lost much more.
The problem is that when an investment falls by 50% it requires growth of 100% just to get back level.
So what should investors do?
One thing not to do is give up, pull out and put your money in the bank. It would take over 20 years at their rates while they would use your money to take advantage of any rebound and pocket your profits.
The markets will recover. Think about it. They always have before and if they don't then the capitalist system will collapse. How likely is that?
This doesn't mean that you should do nothing. I suggest you contact your broker. Like most people you probably have a portfolio of mutual funds with an offshore insurance company. The big advantage of these contracts is that you can switch between different funds absolutely free. This means for example if you are currently holding European Equities and you feel US Equities will come back first you can change without cost.
It's important to study the markets first and then sit down with your broker.
Do this quickly because when the big rebound comes, those in there in the first few days will profit most.
One other way takes courage. If when you originally bought your investment and thought it fair value then it really is good value now with the buying price reduced by 50%.
Let's say your original investment was US$ 100,000 and the current value is US$50,000.
Then you require 100% growth to break even.
Let's be courageous and invest another US$25,000 now.
That would bring the total current value of your portfolio to US$75,000.
And the huge bonus is that you now only need growth of appro. 34% to break even overall.
Still a huge task. And how long will it take to gain 34% and where? you may ask.
Well I have recommended this company before on these pages and their performance continues to sparkle. Since 1990 Annualised return of 19.7%. Year to date performance of 11.1%.
While world stock markets have been hammered in the last few years Man-Ahl Diversified futures has in year 2000 returned 18.8% 2001 18.8% 2002 11.1%
One other startling fact. In the tragic month of September 2001 when world stocks dived
This fund unbelievably returned 10.4%.
This really shows that this investment does not depend on markets for its returns. Looking at these figures 34% growth for your portfolio is possible in a shorter time than you think.
Obviously the sensible investor will say O.K. you can show me these fantastic returns but high returns mean one thing- High Risk. You're right that is normally the case and most people in to days economic environment cautiously stay away from any risk.
But one of the great thing about Man (besides the fact that they have been in business since 1784) is that they introduce (four times a year) a capital guaranteed produce.
Their current offering for instance is guaranteed by ABN AMRO N.V. a relative youngster having been founded in 1825 by Dutch Royal Decree. ABN AMRO is also the largest foreign banking group based in the USA.
So all is not gloom in the investment industry. Look for a deal similar to this, which is not based on market direction and if that company has a rock solid pedigree then either as a new investor or as a traumatized investor trying to recover, it could be well worth your consideration.