Wall Street Math Doesn’t Add Up
How familiar are you with Wall Street Math? The stock market lost -50 percent during the 2000-2002 Technology Bubble and lost -50 percent again during the 2007-2009 Financial Crisis, crushing American portfolios and dreams.
In 2008, the US economy lost an estimated 22 Trillion dollars! You lost so much because you didn’t know how much risk you were taking and don’t understand Wall Street Math.
Most people think they can take risks because if they make 50 percent and then lose 50 percent, they’re back to even. But it isn’t true.
Let’s say you have a 1 million dollar portfolio and make a huge gain of 50 percent, up to 1 million five hundred thousand dollars. Then you lose 50 percent. Are you back down to your original one million dollars with no harm to you? No!
Your new 1 million five hundred thousand dollars lost -50 percent, which is a 750,000 dollar loss, bringing your portfolio to 750,000. Dollars. So, a 50 percent gain followed by a 50 percent loss, creates a 25 percent loss to your savings. Your original 1 million dollars is now only worth 750,000 dollars… a loss of 250,000 dollars. This is Wall Street Math.
You may also be interested in this recent video from our Whiteboard Series.
If you want to learn how to protect your savings against large losses, call us today.
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