This book took a while to write—roughly two and a half to three years; however, the investment strategy itself did not take that long to develop. The entire length of writing time was necessary to fully explain and document the strategy’s validity in the larger context of the stock market and the entire free-market capitalist system in which investors operate. The 42 detailed tables and 9 charts alone required over 300 hours to complete, and they were completed with no quantitative software or financial programs. All the numbers were individually hand-calculated, checked, and rechecked, line by line, table by table, in a methodical and precise manner. The numbers are correct and reliable; they document and clearly support the positive results of practicing my strategy.
I was on a mission—a mission to explain the truth and offer an explicit explanation of how to make a lot of money during a stock market crash or a severe correction (overall market decline). I expected skepticism. I am not a writer by livelihood and definitely not by inclination. But still, I had developed a passion for communicating this truth. How else to explain sitting down at my computer keyboard hour after hour, day after day, month after month, while other demands of life unsuccessfully competed for time; demands which were routinely ignored, phone calls frequently not made or returned, and exercise that was no longer a regular routine. Extended family and friends, unfortunately, were out of sight and mind. I am not unique in experiencing this personal conflict, I know. No one should (or does, I’m sure) feel sorry for me.
After the crash of 2007–2009, I had developed the basic framework of how this strategy should work. My personal results in that crash are explained in Chapter 1, and it was those results that provided the genesis for this strategy’s framework. As I continued to think about it, the development of the specific steps of Strategic Stock Accumulation (SSA) was finally completed by 2012.
Altogether, it was another challenge to communicate clearly on paper as to how such an alien financial idea can be so successful; an idea that demands buying stock as the market continues to drop, even when it drops as far as 50% or more down! Some would erroneously think that this is insanity.
I believe that you will find the explanation of my strategy easy to read. Not only does it make sense, but hopefully my book will stimulate enthusiasm for this strategy that will lead investors to put the strategy into action for realizing its true potential and practical value.
Strategic Stock Accumulation, SSA, is a strategy system that any investor can follow. But just as important, it is a strategy that allows investors to conquer a most feared action of the stock market; an action that takes place, on average, once every four years: the regular occurrence of stock market crashes and severe corrections. The SSA Strategy will result in large profits, with less risk, from exactly those two occurrences.
But how can this be possible without attempting to “time the market”? Accurately determining when to get in and when to get out, or exactly when to buy and sell, is a skill that many “experts” say cannot be done. Many of these same experts also say, tongue in cheek, that it’s important to “buy low and sell high,” knowing that they can’t even do this consistently themselves. They then proceed to tell investors, in one way or another, how they will help them to do exactly what they have just said cannot be done.
But, how is it possible to buy low and sell high if an investor cannot time the market? How is it possible to make a profit without buying in at lower stock market levels and then selling out at higher levels?
I could start to see clearly that there was a strategy in accomplishing this goal, without timing the market. A strategy that would dictate buying and selling regardless of whether the investor thought that the stock market would go up or down in the next few days or weeks. That strategy is Strategic Stock Accumulation (SSA), and this is the subject of this book.
There is a known stock market investment strategy (Dollar Cost Averaging) that emphasizes buying roughly the same dollar amount of stock in bear (trending downward) markets as well as well as bull (trending upward) markets. There is another investment strategy (Value Averaging) that involves investing in down and up markets based on a specific formula. This strategy offers a method of guessing what a long-term market return will be, and then based on that return, calculates a monthly investment amount that should give a desired result by retirement time. There is another commonly used strategy today that rebalances an asset allocation regularly (Asset Allocation and Rebalancing), attempting, in the process, to gain large (largely unsuccessful) profits by buying low and selling high.
Parts or some combination of the above partial bear market strategies are used by many investors. But, to my knowledge, there are no strategies out there that have systematized a valid investment process that invests only in stock market corrections and crashes. Strategic Stock Accumulation is totally unique in this regard.
I saw that it was indeed important to write down and systematize the strategy so that anyone could understand it and put it into practice.
It was even more important to be able to prove that it works. What difference does it make if investors understand how an investment strategy works and can be implemented, if there is no documentation or proof that it will be successful?
Affirmative documentation was indeed accomplished by back-testing three different strategies (including SSA) through six different time periods, going back as far as 1929 (see more details in Chapter 9). The other two strategies tested (and compared with SSA) were two of the most commonly used strategies today, Proportional Rebalancing and maintaining a 100% All-Stock portfolio. I reproduced, as closely as possible, the economic conditions present during those six time periods. I then introduced all three strategies (two of them with three different stock/bond-cash ratios) into those economic environments and watched closely, documenting exactly how they performed. The results are all included in Tables 1A-G TO 6A-G, found on this website, and in Chart 9 at the end of Chapter 9.
Strategic Stock Accumulation was easily the most successful of all three strategies back-tested over a 41-consecutive-year period. There is no question in my mind that you will be able see and understand this clearly after seeing these results for yourself.
You will be able to profit greatly from Strategic Stock Accumulation Strategy as explained in this book. Read it. After reading it, you must put the strategy into action!