ASFA INVESTMENT STRATEGIES are based on the simply principle that producing consistent positive returns while avoiding significant losses provides one of the best ways to build real wealth over time. Let’s look at a few simple facts
1. Compounding only works in one direction      Compounding has been described as one of the most powerful laws of math on the side of the investor. By producing positive returns year after year without a significant loss, investment capital will appreciate faster than a less consistent series of returns. Consider this:      Two investments have two distinct streams of returns over a 5 year period. Investment A produces a straight line 10% return every year. Investment B has more erratic returns with the same average of 10% per year, but look at the different results due to compounding.      Unfortunately, most investors fail to understand this basic principle and accept losses as a cost of doing business with the markets.	Investment A - $100 Investment B - $100 10% return = $110 10% return = $115 10% return = $121 20% return = $138 10% return = $133 -10% return = $124 10% return = $146 12% return = $138 10% return = $160 13% return = $156 Average return 10% Average return 10%
2. Time Value of Money      Warren Buffet has two rules for investing. Rule #1: Never lose money. Rule #2: Don’t forget rule #1. The Time Value of Money principles are another misunderstood concept among investors. Simply put, when investment capital is lost, it takes a disproportionate amount of time and return just to get back to even.       When our investments lose money, we have less capital to work at the bottom. Beyond the disproportionately large return necessary to break even, think about how much of your investing life is wasted just “recovering” from losses. Consider the table to the right.       Once again the simple facts are undeniable. The trick to building real wealth is earning consistent positive returns every year, avoiding losses and let compounding work for you.	If the decline is: It takes the following return just to break even. 25% loss 33% 33% loss 50% 50% loss 100% 75% loss 300%
3. Real Results Speak For Themselves      If you look at the Cumulative Total Returns chart on the right, the benefits of avoiding significant losses become obvious. Returns over a 11 year period for our flagship "All Season" strategy still has a 93% advantage over the S&P 500 for the same time period, net of all fees. That's more than five times the return of the US stock market with a fraction of the risk. Individual calendar year returns compared to the various market indices can, and will, underperform especially in a strong bull market year. However, keeping losses to a minimum or even staying positive, especially during bear market years is really where the smart money is made. The results in Cumulative Total Returns, speak for themselves.