This is the email that was sent to ASX Momentum (only) members:
As you’re probably aware the ASX Momentum strategy is currently in a drawdown (a decline in equity).
This is completely normal and well within the realms of what is expected.
Our extensive testing, going back to 1995 and covering many market events, suggests the 5 worst drawdowns have been:
-26.7%
-25.2%
-23.7%
-19.5% (current)
-18.9%
Every investment strategy sustains some type of drawdown. Buy and Hold regularly has 50% drawdowns, some double what we’d expect with this strategy.
The ASX Momentum strategy has shown itself to fully recover from drawdowns in 12 – 14 months*.
Indeed, Trish and I just increased our allocation to the strategy by 25%. The logic is simple. Our rigorous testing shows the strategy always recovers*, and that, for the most part, the worst of this drawdown is over.
Drawdowns are not comfortable. But they are part-and-parcel of the journey to successful investing.
I’m here to answer any questions you may have.
Nick
