Unshakeable: Your Financial Freedom Playbook

by Anthony Robbins

Their conclusion: just holding the market (via an index fund) outperformed more than 80% of market-timing strategies.

But there’s another problem that few anticipate: today’s winners are almost always tomorrow’s losers.

One way to achieve asymmetric risk/reward is to invest in undervalued assets during times of mass pessimism and gloom.

As you’ll learn in the next chapter, corrections and bear markets can be among the greatest financial gifts of

not maximizing your contributions, now is the time to do it!

I always start with a focus on not losing money and on getting asymmetric

there are four important ways to diversify effectively:

you were diversified among a basket of index funds—including US stocks, foreign stocks, and emerging-market stocks, bonds, and real estate—between the beginning of 2000 and the end of 2009, a $100,000 initial investment would have grown to $191,859. That’s a 6.7% average annual return during the lost decade!

The trouble is, everything is cyclical.

I discuss this in detail in Money: Master the Game, laying out the exact asset

owning low-cost index funds that invest in six “really important” asset classes: US stocks, international stocks, emerging-market stocks, real estate investment trusts (REITs), long-term US Treasuries, and Treasury inflation-protected securities

even shared the precise percentages that he would recommend allocating to each.

“The holy grail of investing

is to have 15 or more good—they don’t have to be great—uncorrelated bets.”

Ray emphasized that, by owning 15 uncorrelated investments, you can reduce

your overall risk “by about 80%,” and “you’ll increase the return-to-risk ratio by a factor of five. So, your return is five times greater by reducing that risk.”

their example by diversifying broadly, you’ll be prepared for anything, freeing you to face the future with calm confidence.

As he’ll explain, it all starts with building a diversified portfolio that can prosper through thick and thin.

First of all, we were in a better ship! Long before the bear market occurred, we

First, you need the right asset allocation

Second, you need to be positioned conservatively enough

What’s the other 10%? That’s all about how you react emotionally in the midst of the storm.

This historical perspective gives me unshakeable peace of mind, and I hope it will help you to keep your eyes on the prize, regardless of the corrections and crashes we encounter in the years and decades to come.

Instead of betting on individual companies, we bought index funds, which gave us instant diversification (at a low cost) across these massively undervalued markets.

How come? Because different asset classes don’t usually move in tandem.

In 2008 the S&P 500 fell 38%, whereas investment

grade bonds rose 5.24%.I If you owned stocks and bonds, you took less risk—and achieved better returns—...

In the short term, the stock market is entirely unpredictable, despite the claims of “experts” who pretend to know what’s going on!

Why? Howard Marks, one of America’s most respected investors, candidly told Tony, “There was no good reason for the decline. Equally, there was no good reason for the recovery.”

But in the long run, nothing reflects economic expansion better than the stock market. Over time the economy and the population grow, and

workers become more productive. This rising economic tide makes businesses more profitable, w...

Nobody understands this better than Warren Buffett.

In short, bad news is an investor’s best friend.

suggest you commit that line to memory: “Over the long term, the stock market news will be good.” If you truly understand this, it will help you to be patient, unshakeable, and

it makes sense to allocate a good portion of your investments to the stock market.

As much as possible, try to keep a financial cushion, so you’ll never have to raise cash by selling stocks when the market is crashing.

One way to build and maintain that cushion is to invest in bonds.

So where do bonds make sense in your portfolio?

Less conservative investors might put a smaller portion of their assets in high-quality

More aggressive investors might keep a portion of their money in bonds to provide them with “dry powder” that they can use when the stock market goes on sale.

This is exactly what Creative Planning did during the financial crisis: we sold some of our clients’ bonds and invested the proce...

There’s just one problem: it’s hard to be enthusiastic about bonds in today’s weird economic environm...

It’s one of the worst bets I’ve ever seen.

The challenge is that you earn nothing these days if you keep your money in cash. In fact, after inflation, you’re losing money by holding cash. At least bonds provide some

First, a word of warning: many alternatives are illiquid

tax inefficient, and laden with high expenses.

they have two attractive attributes: they can (sometimes) genera...

and they may be uncorrelated to the stock an...

Let’s look at five alternatives, starting with three that I like, followed by two that I don’t:

Real Estate Investment Trusts.