Historical Risk Profile

Market cycles are not created equal. The Go-Go Years and the Dot-com Bubble gave several generations of people the impression that skilled trading and stock-picking were key to high returns. “Buy and hold” was declared dead each time, yet it was the best strategy for other eras.

The good news is we can measure this using the historical risk profile, and do as market conditions dictate. This metric helps us determine when to engage in active management ("trade") and when to invest passively ("buy and hold"). Each dot on this chart represents a monthly data point for the S&P 500 Index starting in 1960. The orange dot represents the current month.