Wurz Financial Services - Retirement Planning and Investment Management







Dynamic Portfolio Management - an adaptive approach for profiting in good times and bad

How do I take advantage of growth in the stock market and protect my portfolio from the next prolonged bear market?

You want to remain aggressive and stay invested in the markets, but if you're retired or approaching retirement, you can't risk another devastating bear market like the 2008 financial crisis. You need to maximize the growth of your investments so you can fund your retirement spending and protect your portfolio from protracted declines. How do you accomplish both?

Traditional portfolio management, based on Modern Portfolio Theory, suggests investors should simply "buy and hold." This approach relies on diversification and a fixed percentage of bonds in a portfolio to reduce risk.

This approach has been relied on by advisors around the country for years and has been a fairly good approach since about 1980 when the bond bull market began. But we feel this approach is not best for individuals within 5-10 years of retirement or who are already retired.

Here's why:

1. Stocks and bonds are not always non-correlated. Most people believe that when stocks go down, bonds will go up and provide protection. But history has shown this is not always the case. In fact, much of the time stocks and bonds are positively correlated--meaning they move in the same direction.(1)

2. Diversification does a poor job of reducing risk in extreme market events. Diversification assumes that you can reduce risk by spreading your investments among many different asset classes. And most of the time this works pretty well. But during extreme market downturns, like the financial crisis of 2008, risk assets tend to become strongly correlated and move together.

3. Buy-and-hold relies on having LONG time frames and ignores the potential volatility of the market. Investors near retirement don't have decades to invest. They need to be aware of what can happen in the markets. Extreme events are more common than we like to believe. From 1900 to 2014, the best 1 year period of the S&P 500 was +121.1%. Not bad! However, the worst 1 year period in the market was -63.7%. Extended the time frame to 5 years doesn't help much. The best 5 year period for the S&P 500 was +34.1% annualized return. The worst 5 year period was -17% annualized. Combining stocks and bonds doesn't help much either. The worst 5 year period for a 60/40 portfolio was -7.9% annualized return. Investors who are near retirement cannot afford to average -7.9% for 5 years. That kind of negative return would devastate any retirement plan.(1) 

Surely, there's a better way!

There is.

We believe a dynamic and flexible approach

that can adapt to market conditions is a more prudent approach for retirees. 



Our Process

We use technical analysis and indicators to determine when to invest in the markets and when to reduce exposure to protect our clients from severe downturns. Our three indicators are based on the simple idea of supply and demand. When demand for equities is strong, we believe markets move in a positive direction. When demand for equities is weak, we believe markets move in a negative direction. Our indicators are based on measuring demand for equities over different time frames:

  1. Bull / Bear Inidicator: year over year time frame
  2. Quarterly Indicator: determined on a quarterly basis
  3. Short Term Indicator: measured over weeks to months

When all of our indicators are positive, we will maximize exposure to equities. When one or more become negative, we will reduce exposure to equities. It's really a simple idea. And we believe this is a prudent framework for helping our clients maximize their growth and defend their portfolios from major downturns in the market. 

When invested, what do we invest in? Again, using technical analysis, we identify and invest in asset classes that are exhibiting the strongest positive trends and avoid those that are exhibiting weak or negative trends. We believe this approach puts us in the best position to profit from market rallies by focusing on the drivers of market up-trends.  


Fees and Minimums:

Our portfolio management service includes access to our MoneyGuidePro retirement planning program and is covered by a single annual fee, calculated as a percentage of assets invested. This fee is deducted from the account on a quarterly basis. For multiple accounts in one household, we aggregate accounts together to determine the fee level.

  • 1.1% for households under $100,000
  • 1.0% for households greater than $100,000 and less than $1,000,000
  • 0.9% for households greater than $1,000,000 and less than $5,000,000
  • 0.7% for households greater than $5,000,000 and less than $10,000,000
  • 0.5% for households greater than $10,000,000

Our custodian for managed accounts is TD Ameritrade. TD Ameritrade charges an asset-based fee of 0.1% on certain assets to cover all trading expenses. This means our clients do not pay comissions, trading fees or transaction fees on trades in their TD Ameritrade accounts. 

Want to learn more? We would love the opportunity to discuss our strategies in more depth with you. Call us at 888-510-2362 or use the link below to send us a message.

Contact Us





(1) Adam Butler, Michael Philbrick, Rodrigo Gordillo, Adaptive Asset Allocation (Hoboken, NJ: John Wiley & Sons, 2016).

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