“Why do we compete against the Dow Jones Conservative Index (P20GLB) and not the S&P 500 Index (SPY)?†That is a question I am often asked by my clients. The reason is because I judge my performance over a long term period, through multiple bull and bear markets. I do so because markets, despite what many people may believe, don’t always go up  all the time and usually have previous bull market gains wiped out completely in bear markets. By having the ability to not be fully invested at all times, the Dow Jones Conservative Index has been one the best performing Indices over the last 15 years.
Most investors do not invest for just 1 or 5 or even 10 years, but invest over a lifetime, so it is thus important to use a strategy that will allow one to have consistent returns over a decade or two, through multiple bull and bear markets. Here is the actual 15 year track record for the Dow Jones Conservative Index (P20GLB) (BLUE LINE) vs the S&P 500 Index (SPY) (RED LINE).Â
The Dow Jones Conservative Index has gone up +125.79% through two Bull and two Bear Markets, while the S&P 500 Index has gone up only +27.50% during that same time frame. Thus by being conservative, the Dow Jones Conservative Index has beaten the S&P 500 Index by over +457% in relative performance since 1999.
Now after reading that, you are probably asking yourself, why not just sell when a bear market starts and then buy back in when a bull market starts? Well from many decades of analyzing the markets, I have never been able to find anyone with the ability to achieve that feat consistently, as one never knows when the markets will crash or how far they will go up in bull markets. Warren Buffett, the greatest investor in history, has the following track record vs. the Dow Jones Conservative Index over the last 15 years:
As you can see his Berkshire Hathaway (BRK-A) has underperformed the Dow Jones Conservative index about 90% of the time over the last 15 years and in the 2008-2009 bear market its stock price percentage gains went from having a near 100% profit to fall to 0%. So had you bought Berkshire Hathaway Class A stock in 1999 and held it to 2009 you would have made a zero percent gain during that time frame, while you still would have been up about 70% with the Dow Jones Conservative Index. So with even Warren Buffett not having the ability to predict bull and bear markets with exact accuracy, it becomes rather useless to attempt to do so.
