Protect Long-Term Stock Holdings Against Severe Downturns With The Strategy Of Percentages

A recent question from an investor asked if there was a strategy to protect very long-term stock holdings through bear markets or severe corrections. A lot of investors, especially those who prefer buy and hold strategies rarely worry about a drop in their stocks’ value. Almost all of these investors are seeking dividend growth and they also hope for long-term capital appreciation. However there are some who do use a variety of strategies to set up protection levels in their long-term holds for that “just in case” scenario.

This is because investing in stocks is incredibly risky. No one can judge what calamity might befall the economy, a company, global markets, commodities, currencies and so much more. As well many companies do slash dividends when revenue growth enters a period of lengthy and/or sharp declines. All investors have witnessed this type of occurrence if they have invested long enough.

The strategy that some long-term investors use is the Strategy Of Percentages. In this strategy article I outline the strategy of percentages and show how since 1995 an investor who bought Bank of America Stock would have implemented the strategy, protected long-term capital in use and profited from it. This article is 2200 words in length and will require 9 pages if printed.

The rest of this strategy article is for FullyInformed Members.