No. of Recommendations: 14
The Bear-catchers also catch their share of skunks, no question. But skunks just stink up the place. They won't eat you alive.
When back-tested over extended periods of time, BCC generally seems to add 100-150 basis points vs buying and holding the S&P, with markedly improved risk metrics: but start dates matter, and you can certainly find some where things don't work out so well. I can't honestly think of any portfolio I've looked at whose backtested performance was not improved by including BCC: but I no longer invest in individual stocks, and the application of BCC to a more typical MI port may not be so smooth.
In any case, the reason to use it is really risk management, rather than as a tool to boost returns. As so often with investing, it's psychology that matters most in practice. From my perspective what we have experienced since Dec 2021 is not a big bear by any means. It may become one, however, and if it does BCC will afford significant protection. If not, then it won't.
If you are confident you can ride out slumps like 2001 and 2008 without flinching, while fearing and loathing every whipsaw you have to live through in less dire times, then BCC is not a tool you will like. As I say, it's about risk management, and there are other ways to do that.
Baltassar
