Market Corrections: How Small Investors Can Survive and Thrive

Advisors Outline "Seven Truths" of Long-Term Portfolio Management

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Oct 21, 2014, 06:38 ET

LOS ANGELES, Oct. 21, 2014 /PRNewswire/ -- In the wake of the stock market's recent swoon after years of steady increases, many advisors see the pullback as a buying opportunity. For the average investor, the picture is not quite as clear.

"During times of turbulence, most investors are simply incapable of staying 'buckled in,'" says Selwyn Gerber, CPA, RIA and founder of Los Angeles-based wealth advisors RVW Investing LLC.

"This kind of restiveness is natural, but it's why most investors have terrible experiences with their stock investments."

That's also the takeaway from RVW's free new report entitled The Seven Truths Every Investor Should Know about Market Corrections.

"History shows that each market plunge was nothing more than the landing of a pogo stick," notes Mr. Gerber. "Inevitably, the compressed pogo stick releases its stored energy and bounces back, surging to new heights."

RVW's investing philosophy builds on the life work of investment guru Warren Buffett and the findings of Nobel Prize winning economist Eugene Fama. Fama's clear, plainspoken analysis provides backup and validation to the three pillars of RVW's own investment model: Design diversified portfolios that capture market returns; overweight those factors that historically have delivered superior returns; and minimize costs.

Despite recent downturns, RVW remains firmly confident regarding the continuing long-term upward direction of the market. They cite key indicators:

•	The fundamental economics that are necessary for successful corporations remain intact. The Forward Looking Earnings Yield on the S+P 500 is now over 6%

•	Moreover, corporations are benefitting from a surge in manufacturing that is coming from many sectors. Industrial production increased 1.0% in September, and is up 4.3% over the past twelve months

•	The decline in oil prices may be disruptive to companies, but it is a bonus to consumers.

	Research shows that approximately every penny decline in the price of a gallon of gasoline translates to about $1 billion in additional disposable income for American households. And, according to a Morgan Stanley report released last week, lower gas prices means a boost in fourth quarter household incomes of as much as $40 billion.

The Seven Truths Every Investor Should Know about Market Corrections begins with the admonition that small investors must learn to distinguish between "risk" and "volatility". The report pinpoints how, if understood, the small investor can actually exploit his inherent advantage over the big institutional investors. Stockbrokers and other "experts" do not escape criticism – the report shows how they are frequently a negative force in portfolio growth.

Importantly, the average investor does not escape criticism either: all too frequently, the investor's chief enemy is himself. He's guilty of the very costly "bad behavior" of buying at the top and then selling when panic takes hold.

"History is solidly on the side of the bulls," adds Mr. Gerber. "The key is for the small investor to see the big picture, appreciate the dynamism of a free economy, and see himself as a partial owner of a group of businesses rather than as a holder of pieces of paper that are being frenetically traded like the game of 'hot potato.'"

"With each day's news of particularly volatile trading, our Seven Truths report becomes a more urgent read."

www.RVWInvesting.com

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SOURCE RVW Investing LLC