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Does Your Advisor Buy & Hold Underperforming Investments and Have No Sell Discipline or Strategy?

Third-Party TSG/Spaulding Group Verifies: This Portfolio Has Beaten the S&P 500 for 7 Years Running

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Over the past few weeks, we've analyzed numerous stock and retirement portfolios. The results? Clients are paying high fees yet failing to beat the S&P 500. While underperformance might be acceptable if you’re mitigating risk, our findings show that many advisors aren't even doing that. They're holding onto losing positions with no clear strategy.

Here are the two biggest issues we've uncovered:

  1. Holding Underperforming Investments

  2. No Sell Discipline or Strategy

Here’s how Core OEX picks its 20 stocks:

  1. Is the company in an uptrend? Basic supply and demand—just like the grocery store.

  2. Short-term performance compared to the market

  3. Long-term performance compared to the market

  4. Short-term performance compared to its peers

  5. Long-term performance compared to its peers

Let me explain...

Imagine you're at the grocery store, searching for your favorite fruit. When you find the shelf empty, you know that fruit is in high demand. This is a basic principle of supply and demand. The same principle applies to investments: if a stock is in demand, it might be worth owning.

 

This is the first of Core OEX’s 5-Attribute system: Is the investment in demand? Is it worth adding to your portfolio? Our manager learned this time-tested approach over 20 years ago.

With Core OEX’s 5-Attribute management style, we’ve consistently outperformed the S&P 500 every year for the past seven years. And we don't just claim it—third-party verification proves it.

So, where does our inventory come from? We start with the S&P 500, the 500 largest companies in America. This list is always evolving, replacing underperforming companies with stronger ones. But we take it further by narrowing our focus to the S&P 100, the largest 100 companies. From there, Core OEX selects the top 20 stocks based on the following criteria—and can move to cash if the market trends downward, like before the COVID sell-off.

The Results Speak for Themselves:

According to Nasdaq Dorsey Wright and The Spaulding Group, over the past 6 years, Core OEX has outperformed the S&P 500 by 32.2%. Core OEX’s average return stands at 20.57%, compared to the S&P 500’s 15.16%.

Sources: Nasdaq Dorsey Wright, The Spaulding Group

In the financial industry around…

  • 15% of money managers beat the S&P 500 in any given year.

  • 2.25% of money managers beat the S&P two years in a row.

  • .3375 of money manager beat the S&P 3 years in a row.

  • .05% of money managers beat the S&P 4 years in a row.

  • .007% of money managers beat the S&P 5 years in a row.

  • 0011% of money managers beat the S&P 6 years in a row.

So, how can you tell if your advisor is "minding the store" and stocking your portfolio with winners?

As per The Spaulding Groups assessment beating the S&P makes CORE OEX a Unicorn investor from 2017 – 2022.

We recently reviewed a portfolio containing 7 companies that Core OEX would hold. But this same portfolio also holds the S&P 500, which Core OEX consistently outperforms. That means 7 to 8 holdings in this portfolio are underperforming and should be sold. This is a clear sign that the advisor lacks a Sell Discipline or Strategy.

What Are the Results?

Sources: Nasdaq Dorsey Wright

How has this compared to CORE OEX and the S&P 500?

Sources: Nasdaq Dorsey Wright, The Spaulding Group

When we analyzed these holdings, two things became clear:

  • Underperforming Investments

    • 7 to 8 holdings are underperforming and wouldn’t be in the Core OEX Portfolio.

  • No Sell Discipline and No Strategy

    • Despite a significant gain in LLY, the advisor has no plan to lock in gains when LLY retraces. Core OEX allows winners to run but ensures gains are protected with a solid Sell Strategy.

If your advisor isn't doing this, it’s time to ask some tough questions. Is your portfolio set up to win—or is it just collecting dust?

Here Is The Deal: If You Want…

  • A portfolio of 4 and 5 Attribute Investments

  • To Stop Holding Underperforming Investments

  • A Disciplined Sell Strategy…

Get a No Obligation Portfolio Review and Strategy Session

Call (941) 800-2424

The information provided in this communication is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any particular security or investment. Past performance  is not indicative of future results, and all investments involve risk, including the potential loss of principal. It is important to conduct your own research and consult with a qualified financial advisor before making any investment decisions. The opinions expressed herein are those of the author and do not necessarily reflect the views of the firm. This material is based on information believed to be reliable, but no warranty is given regarding its accuracy or completeness.

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