10 Best Stocks to Own in 2022

This Simple Math Shows Why Not Losing Is Far More Important Than Winning Big... [View Online](=)|[Unsubscribe]( [Street Authority Daily] -[]Recommended Link Sponsored Content [10 Best Stocks to Own in 2022]( Major economic shifts are coming as America moves on from COVID-19. Some companies will face bankruptcy and others will enter 2022 with strong tailwinds. [Click here to see the list now.]( March 1, 2022 This Simple Math Shows Why Not Losing Is Far More Important Than Winning Big... By Jimmy Butts [Jimmy Butts] There had to be a few pages missing. This couldn't be everything... That was my first instinct when my father-in-law asked me to look over his investment portfolio a few years ago. As you're likely well aware, things got messy during the financial crisis. Folks lost their homes, retirements, jobs -- and many lost hope. And in my former life as a financial advisor, it was tough sitting across the kitchen table with many of these good people and listening to their stories. -[]Recommended Link [Did this "Tiny Texas" company just uncork the "Mother of all oil booms?"]( Located deep under this pristine, West Texas prairie… [one tiny company is sitting on the largest Oil reserve in history…]( with enough "black gold" to independently power America for the nest 49 years… and IF you play your cards right, it could hand you up to 61,832. [Get the full story behind the "mother of all booms" NOW]( If anything, it taught me a valuable lesson. Specifically, it taught me about the importance of portfolio management (especially when it comes to other people's money). After all, big returns are great, but I'm more interested in how much I can avoid losing during market declines. Don't get me wrong. I like finding the next big winner as much as the next guy. But seeing firsthand what a devastating loss can do to a portfolio made me acutely aware of what it takes to climb out of that. And here I was, reviewing my father-in-law's portfolio. What I saw was more than just a little concerning. He said he took a pretty big hit during the financial crisis. Of course, nearly everyone took a hit during that time. But one thing caught me off guard... I made the incorrect assumption that as a man closing in on 60, his advisor would have begun to trim down his equity holdings. I was wrong. About 50% of his portfolio was allocated in an aggressive growth fund containing domestic stocks, and 50% allocated to a growth fund invested in European stocks. In other words, he was 100% invested in equities. If that weren't alarming enough, from the highs in 2007 to the low in 2009, the two funds that my father-in-law was invested in plummeted roughly 50%. It's sometimes hard for investors to grasp what that sort of loss means. That could be because of how we can manipulate numbers using simple math. Let me explain... The Hard Truth About Your Portfolio Imagine that Investor A's returns each year over a five-year period were 70%, 10%, 30%, 5% and -70%. To find the average most folks might use the arithmetic average. This adds the performance of each year up and then divides by the number of years. So in this example, Investor A might say he's averaged about 9% returns over the last five years: (70%+10%+30%+5%-70%)/5 = 9%. That doesn't sound half bad. On a $100,000 portfolio, one might think that with an average annual return of 9% he'd have about $150,000 after five years. But that's not how it works out in real life... Using that same example and computing the returns with the correct geometric average, we realize that Investor A's average return paints a different picture. That's because each successive term is dependent on the previous outcome. This will provide us with the correct and real return an investor would make. Instead of 9%, Investor A's actual average return is -5.2%. Sound crazy? Trust me, it's not. Here's the math: ((1.7x1.1x1.3x1.05x0.3)^(1/5)-1) = -0.05, or -5.2%. Here's another way simplified way of looking at it: Year Rate of Return Dollar Amount 0 - $100,000 1 70% $170,000 2 10% $187,000 3 30% $243,000 4 5% $255,255 5 -70% $76,577 So instead of about $150,000 after five years, the portfolio value is about $76,577 -- nearly half of what Investor A thought he might have. And all it took was one abysmal year to wipe out five years of growth. Here's the simple mathematical truth you need to understand to be a better investor. A 50% loss requires a 100% return just to get back to even. Think about that. How many times have you bagged a triple-digit winner in a year or less? The table below tells you what return you must achieve in order to get back to even after suffering a loss: Loss Return Required To Recover -10% 11% -20% 25% -30% 43% -50% 100% -70% 233% Closing Thoughts As William Lippman, the 90-year-old money manager for Franklin Templeton once said, "Better to preserve capital on the downside rather than outperform on the upside." In my father-in-law's case, those funds didn't recover until about five years after the financial crisis. And when you're closing in on retirement, you can't afford to lose five years. There are a few things that investors need to understand if they want to truly build wealth over the long-term. It's about more than just picking the right stocks... Allocation and risk management are vital. Understand the effect that losses can have, and what it takes to recover from them. Remember, the power of compounding only works when you don't lose money. One year of suffering a bad overall loss in your portfolio can take years to recover. That's why I dedicate the bulk of my time looking for rock-solid companies that should deliver consistent returns, year in and year out. And so should you... Understand that I'm not advocating that you move to all cash in times of crisis, or every time the market has a violent downswing. In fact, I look at every downturn as an opportunity. It gives us the chance to pick up some of our favorite stocks at a discounted price. And because we have a plan in place for each holding, my subscribers and I can get a good night's rest. For most investors, your goal should be to to find the absolute most dependable stocks the market has to offer. That's what you build your portfolio around. But here's the good news. Once you build the core of your portfolio with stocks like this, and have a firm understanding of risk and allocation, then investing starts to get really fun... There's nothing wrong with swinging for the fences, once you understand the ideas I've discussed above. In fact, that's what my most recent report is all about... My team and I have released 7 shocking market predictions for 2022. They run counter to conventional wisdom and are the most controversial market calls I've made in years. Past predictions have handed investors a shot at raking in 622%, 823% and even a whopping 1,168%. Of course, not every single prediction we make in this year's report will pan out. But by carefully deploying a small portion of your portfolio into just a handful of ideas like this could really move the needle on your wealth over the long run. [Go here to learn about this year's predictions now.]( -[]Recommended Link [Are these 5 ]( [Are these 5 "Bulletproof buys" the key to a wealthy retirement?]( Imagine never having to worry about where the market is going again. Whether it goes up, down or sideways, you'll sleep soundly, knowing that your nest egg will continue growing. All thanks to 5 "bulletproof" stocks that are so strong, so safe, and so generous, they could help put your retirement worries to rest, for good. Now, I've put them all together in a special report I want you to have for free. [Get the full details here.]( To ensure that you receive these emails, [please add us to your address book.]( Disclosure: StreetAuthority doesn't own shares of any securities mentioned in this article. Members of our staff are restricted from buying or selling any securities for three days after being featured in our advisories or on our website. StreetAuthority is a publisher of financial news and opinions. StreetAuthority is not a securities broker/dealer or an investment advisor and we do not recommend or endorse any brokers, dealers or investment advisors. This work is based on SEC filings, current events, interviews, corporate press releases and publicly available information which may contain errors. All information contained in our newsletters and/or on our website(s) should be independently verified with the companies or sources mentioned. You are responsible for your own investment decisions and should always conduct your own research and due diligence and consider obtaining professional advice before making any investment decision. This message was sent by an automated message delivery platform. Please do not reply to this email address. Any messages sent to this address will be automatically deleted. We sincerely hope that you benefit from your subscription to this complimentary newsletter, and we're willing to do whatever it takes to keep you as a satisfied subscriber. You may contact our customer service department by [visiting this link](. To update your subscription or unsubscribe, please [click here](. 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