Source: Zephyr StyleADVISOR, Swan Global Investments

As one can see here, this can have an extreme impact on the value of an investment.


For the retiree, bear markets are no longer a golden buying opportunity. An investor in the distribution stage of their life cycle is forced to liquidate holdings at a market low.

  • If the market sells off 45% over the course of three years, like it did in 2000-2002, the principal left to make a recovery will be much diminished if the investor was taking out an additional 5% each year to meet living expenses.

In other words, withdrawing funds in a bear market just makes the hole deeper. This is can be thought of as the opposite of “the miracle of compounding returns.”

By design, the DRS was meant to minimize losses. One of the core beliefs of Swan Global Investments is that the best way to make money is to not lose it in the first place. This is especially important for those investors in the retirement stage, drawing down their accounts to fund living expenses. That is why the DRS always hedges the portfolio against catastrophic market losses.

To learn more about Swan’s DRS investment approach and how this approach has fared in the past, please contact Swan at 970-382-8901.