Since the beginning of the year, we’ve seen the market crash as much as 34% and rally as high as 46%.
The coronavirus pandemic has caused historic volatility this year… And that’s not a good thing for investors, especially if they aren’t prepared to handle it.
You see, many investors buy stocks at market tops… and then they sell at market bottoms.
Selling high and buying low is a recipe for losing money.
But what if I told you there’s a strategy that protects your portfolio during crashes, yet outperforms during rallies…
I’m talking about stocks that don’t drop more than 10% in bad years… but return nearly 10x the market over the long term.
A strategy like that would insulate your portfolio from a pandemic, trade war, economic meltdown, or social unrest. Yet it would make you double-digit gains when the market rebounds.
Today, I’ll tell you what that strategy is – and how you can profit from it.
The Untouchables Strategy
I call it the “Untouchables” strategy for two reasons…
First, you’ll never want to touch the stocks in this portfolio. And second, no one can touch its performance.
Not only do our Untouchable stocks outperform the market over the long term, they also don’t expose you to extreme market drops like we saw in February and March.
To find Untouchables, we studied each major bear market over the last two decades (there were two).
We combed through 19,000-plus publicly traded stocks in North America using data subscriptions that cost over $50,000 per year combined.
What was the goal? To spot the stocks that don’t suffer big drawdowns during market volatility (like we’re seeing now) but outperform over the long term.
In the end, only 13 stocks made the cut.
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They stayed afloat even in the worst downturns. The Untouchables strategy cranked out positive returns in the worst calendar years over the last two decades (including all 20 calendar years).
Take a look:
- It was up 26.1% in 2000 when the S&P 500 was down 9.1%.
- It was up 14.7% in 2001 when the S&P 500 was down 11.9%.
- It was up 13.8% in 2002 when the S&P 500 was down 22.1%.
- It was up 3.4% in 2008 when the S&P 500 was down 37%.
- It was up 17.3% in 2018 when the S&P 500 was down 4.4%.
But what about making money over the long run?
As you can see below, the Untouchables not only outperformed the market… they also outperformed investing legends like Warren Buffett, Carl Icahn, and Prem Watsa.
|2000-2019 Strategy Comparison (Annualized Returns)|
|Broad Market Indices|
|Dow Jones Industrial Average||7.3%|
|Hedge Fund Indices|
|HFRI Fund of Funds Composite||3.4%|
|5-Star Investors (Publicly-Traded Vehicles)|
|Berkshire Hathaway Class A (Warren Buffett)||9.5%|
|Icahn Enterprises (Carl Icahn)||15.2%|
|Fairfax Financial (Prem Watsa)||7.1%|
|Loews (Tisch Family)||9.6%|
|Markel (Tom Gayner)||10.7%|
|Average Joe (per J.P. Morgan Asset Management)||1.9%|
Over the last 20 years, the S&P 500 had a cumulative return of 227%. Meanwhile, our Untouchables strategy returned an average of 2,178% – nearly 10x the market – over the same span.
That’s why you’ll never want to touch these stocks.
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How to Find Untouchables
With all the uncertainty caused by the coronavirus outbreak, now’s the time to consider allocating Untouchables to your portfolio.
This ignored class of stocks not only delivers steady gains… they’re also bulletproof. Since 2000, the Untouchables haven’t seen double-digit losses in any year… Including during the Great Recession of 2008. In short, the Untouchables are safe and they can deliver 10x more gains.
If you want to find Untouchable stocks yourself, they share five key traits:
- They have simple business models.
- They pay dividends.
- They have ultra-low volatility.
- They produce positive returns when the broader market declines.
- And they outperform the market over the long term.
If the last 20 years are any guide, these are the types of stocks that’ll do well, no matter where the market’s headed.
But remember: Always do your homework before making any investment. And never invest more than you can afford to lose.
As I mentioned above, the Untouchables strategy has crushed average returns of major indexes, hedge funds, and average investors. The “Untouchables” are the safest, most consistently profitable stocks out there.
In fact, using this strategy, you would’ve made nearly 10x the S&P 500’s average return over the past 20 years.
If you’re a Palm Beach Letter subscriber, you can access our 13 Untouchable stocks in this special report America’s Untouchables: The Ultimate Portfolio Protection. It’s FREE when you subscribe for Teeka’s Palm Beach Letter service.