Private Advisory Group

Winning by Not Losing

Posted by Christopher

Stadion’s investment method is called ”winning by not losing.” Their focus is on keeping returns as “real” as possible. To achieve this, they work hard to capture most of the market’s good times and miss most of its bad times. Losing less when the market goes down, means you have less to make up to get to a place where your returns are real, not just “relative”.

It is an approach that resonates with investors who want to earn a decent return over time, without worrying about suffering big losses in tough times.

Stadion’s winning-by-not-losing investment strategy has achieved solid long-term results without account damaging, confidence shattering drops along the way. During the Tech Bust, many investors watched in horror as their portfolios lost 25% to 50% of their value. Those investors subsequently needed returns of 33% to 100% just to break even. But because our investors didn’t suffer such severe losses, much of the return we captured in the market recovery was adding to our clients’ retirement wealth, not just recovering what had been lost.

More recently, the bear market that began in 2007 has stripped investors of the gains made during the post-Tech Bust upturn. In fact, by the end of 2008, buy-and-hold investors had experienced what was ultimately termed “The Lost Decade,” a 10-year period of little or no true gains.

Conversely, Stadion clients are protected from staggering losses during these types of bear markets. In fact, during that same lost decade (1999 – 2008), Stadion Managed Strategy investors saw their account values nearly double. We sometimes underperform the market during the up years (capture most of the good times) and then outperform it during the tough years (miss most of the bad times). The net result is what matters. Had you been invested
in Stadion over the past ten years, you would have a portfolio value significantly higher than if you had been in the S&P 500—and with much less volatility.

Their model not only creates a smoother ride, but it can also stabilize your account as you begin to take money out to live on postretirement. Market losses coupled with withdrawals can lead to account depletion that can never be recovered. But with Stadion, the first of these two dangers is drastically reduced.