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Our risk-management investment approach seeks to protect and grow wealth.

The Ultimate Goal of Risk Management

Don’t confuse “percentage” returns with DOLLAR returns

Investors are often asked to focus on annualized percentage returns, but this can divert them from the ultimate long-term goal: cumulative dollar returns. By not taking into account market downturns that can sometimes be masked by percentage return performance, it can be difficult to see the long-term effect market declines have on a portfolio’s ability to experience compounded growth.

This hypothetical example shows how Portfolio A saw its gains evaporate because substantial declines destroyed the ability to achieve compounding. Portfolio A had a +100% gain followed by a -50% loss, while Portfolio B had only a +65% gain, but followed by only a -15% loss. Both portfolios had the same net percentage gain of +50%.

However, over time, while Portfolio A experienced higher percentage gains, Portfolio B was able to limit its downward fluctuations during declining periods. As a result, Portfolio B benefits from compounded growth while Portfolio A makes no advancement after several years invested.

This hypothetical example is for illustrative purposes only and is not intended to project the performance of any specific investment or investment strategy and is not a solicitation or recommendation of any investment strategy. It is only designed to show the mathematical differences between substantial declines and less substantial fluctuations. It does not represent the trading of any actual account.

RAISE 360° Select Models: A Sound Decision-Making Framework for Effective Diversification

Building Pre-Selected, Risk Appropriate Portfolios Across Market Cycles



Investments and/or investment strategies involve risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives. For a complete description of investment risks, fees and services review the Brookstone Capital Management firm brochure (ADV Part 2) which is available from your Investment Advisor Representative or by contacting Brookstone Capital Management.

This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. All data believed to be reliable, but not guaranteed or responsible for reliance on this data. Past performance is not indicative of future results, which may vary. The value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed, and a loss of principal may occur. Not FDIC Insured, May Lose Principal Value, No Bank Guarantee. Risk tolerance, the capacity to accept risk, is a function of both the investor’s willingness and ability to accept risk. Strategies may intentionally differ from traditional index type investments.

Brookstone does not provide accounting, tax, or legal advice. Notwithstanding anything in this document to the contrary, and except as required to enable compliance with applicable securities law, you may disclose to any person the US federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure, without Brookstone imposing any limitation of any kind. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively and investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction.

Exchange traded funds (ETFs) are offered by prospectus only. Investors should consider a fund’s investment objective, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other important information is available and should be read carefully before investing. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. ETFs trade like stocks and may trade for less than their net asset value. There will be brokerage commissions associated with buying and selling ETFs. No current prospective client should assume future performance of any specific investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes to investment strategies, contributions or withdrawals may cause the performance results of your portfolio to differ materially from the reported composite performance. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for market indices generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark. The investment strategy and types of securities held by the comparison indices may be substantially different from the investment strategy and the types of securities held by the strategy. NOT FDIC INSURED. MAY LOSE PRINCIPAL VALUE. NO BANK GUARANTEE.