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Wise Money: Using the Endowment Investment Approach to Minimize Volatility and Increase Control by Daniel Wildermuth

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1The Need for a New Strategy

THE YEARS 2008 AND 2009 TREATED THE AVERAGE INVESTOR VERY poorly. Stock market losses in 20081 were horrific at 37.0 percent for the Standard & Poor’s 500 Index (S&P 500)2 while the average equity sector mutual fund lost 39.70 percent.3 The average American worker lost over one-quarter of his or her 401(k) retirement plan savings in 2008.4 The beginning of 2009 continued the trend with the market declining more than 26 percent5 before sharply reversing as general panic subsided. The market actually ended up 26.5 percent6 in 2009.

The tremendous losses and volatility of these months and years left most investors not only frustrated but also often completely bewildered and overwhelmed. In addition, many supposedly safe ...

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