- 'Cautious' entails more risk than you'd think
- Market losses are still diluted significantly
If you describe yourself as a cautious investor, you might not equate that with a worst-case drop in portfolio value of 15 per cent. That’s the most severe peak-to-trough drawdown our cautious strategy suffered over 40 years of back-testing. That drawdown occurred during the bear market after the dotcom bust, and the time until recovering the prior peak was a miserable four years and two months.