A Dangerous Knowledge Gap
The Investment View From Prescott, Arizona
Over my 27 years in the business, I’ve learned that many investors don’t understand bear market declines – ones that cause stock market losses of 20% or more.
One common misconception is that bear markets are rare events. Actually, there have been 25 bear markets over the last 113 years, or one on average of every 4.5 years.
In fact, the last two big bear markets, 2000-03 and 2007-09, arrived just about on that historical average. It is easy to think that the 1990’s bull market, which lasted for a record ten years, was typical of bull markets, but it was not. Bull markets last only a few years on average.
Surprisingly, investors in mutual funds and variable annuities are at even greatest risk from bear markets because there is a dangerous gap in what investors expect from mutual fund management and what funds are structured to deliver.
If you think the fund manger is going to protect you by moving your money out of harm’s way in the event of a market decline you may be sadly disappointed.
Will Hepburn is the President and Chief Investment Officer of Hepburn Capital Management, LLC, in Prescott, Arizona. He specializes in developing, implementing and teaching innovative investment strategies that Adapt to Changing Markets®.
Will began helping clients make smart decisions with their money in 1977. He practiced as a Certified Financial Planner from 1994-2006, and currently focuses exclusively on investment management.
His academic record includes a major in business and economics at Ottawa University where he studied under Dr. Wayne Angell, a former Federal Reserve Board Governor prior to transferring to the Institute of Computer Technology in Chicago where he graduated first in his class. He has also completed a number of post-graduate level courses with the College for Financial Planning in Denver.
Will is also a college instructor. He taught classes on investments and estate planning at Yavapai College in Prescott, AZ for 20 years. His articles on financial topics have been published nationally and his ideas have been included in best-selling books such as Rich Dad, Poor Dad, by Robert Kiyosaki and leading investment newsletters such as Dow Theory Letters and John Mauldin’s Thoughts from the Front Line. In addition, he frequently gives expert interviews to national media, including InvestmentNews, Kiplingers, Forbes, Fortune, CNNMoney and The Wall Street Journal. Will is a past-president and currently on the Board of the National Association of Active Investment Managers (NAAIM).