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Mullooly Asset Management, Inc

Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

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Not Losing Money is the Key to Making Money

July 28, 2007 by Thomas Mullooly

Is it true that high net worth investors focus only on generating the highest returns? No! The ultra-wealthy focus primarily on risk management. These people are not gamblers.

The old line from Mark Twain — you should be more concerned about the return OF your money than the return ON your money — is very accurate with this group.

The 2003 World Wealth Report (a product of Cap Gemini, Ernst & Young, and Merrill Lynch) showed that during 2002, when the S&P 500 got trashed for 22%, these “high net worth individuals” on average lost only 2.1%.

So, how is it possible that the average investor got slammed — in most cases, for a lot more than 22% — but those folks with more than $1 million in financial assets barely had their first down year — after seven good years?

It’s because they’re conservative and focus on controlling the risk, not focusing on maximizing their return.

Their view is: any advisor we work with must have a discipline that avoids substantial erosion of capital (losing money).

But the typical marketing pitch of so many brokers and investment firms is “we can pick them better than you can.” Without proper risk management, there is no point to that at all.

You can be “right” seven years in a row, but one or two disastrous years can wipe out all the gains you made over that time. That’s exactly what happened to most investors between 2000 and 2002.

Look , you don’t need to shoot the lights out year after year.

Getting consistent positive returns is actually more important than the size of the returns. Don’t lose money, or at the least, keep the losses small! Compounding happens faster with consistent positive returns. That’s the real secret of the millionaire.

Tom

Thomas Mullooly
Mullooly Asset Management LLC
Our Only Business Is Fee-Only Investment Advice
www.mullooly.net
support@mullooly.net

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Filed Under: Asset Management Tagged With: risk management

About Thomas Mullooly

Thomas Mullooly is owner and founder of Mullooly Asset Management, Inc. In 2002 Tom opened Mullooly Asset Management, a fee-only investment advisory firm. As an investment advisor, and not a broker, Tom works strictly for his clients. With the help of point and figure charting, Tom builds a realistic game plan for clients.

1971 State Route 34, Suite 102
Wall Township, NJ 07719

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The information on this website and blog do not involve the rendering of personalized investment advice. A professional advisor should be consulted before implementing any of the options presented. None of the content contained in this website should be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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