Customer Profiles: Asset Revesting Pilot

Asset Revesting Pilot Retirement

Victor is a sixty-three-year-old commercial pilot coming up on retirement. He captains multiple daily flights, each requiring its own briefing, flight deck setup, and turnaround. With weather delays, technical issues, and ATC delays, Victor’s days are long, and his after-work energy is limited. Due to extensive work hours as a short-haul pilot, Victor did not have the time or energy to invest, so he relied on his financial advisor to guide him and his buy-and-hold strategy.

The FAA requires commercial pilots to retire by age sixty-five, so Victor wants to start using his savings to build more wealth as soon as possible. He dreams of purchasing a plot of rural land with his wife and starting a small farm with crops and animals. He also wants to make sure his children and grandchildren have an inheritance—but he doesn’t want his own lifestyle to suffer in order to supply that.

Victor had read about swing trading, where he could take advantage of short-term changes in various stock prices, but he didn’t understand how to analyze the market movements. So he simply invested in whatever was recommended on CNBC and Bloomberg. He made sure to fully invest all his capital, never leaving anything in what he considered a “wasteful” cash position.

It didn’t take long for Victor to see that he had underestimated the sheer volatility of today’s stock market. When the COVID downturn started, he lost 35% of his portfolio value. With only two years left until his mandatory retirement, Victor was terrified. What did their future look like? Would they be forced to stay in the loud, crowded city, unable to buy the farm and settle into a quieter lifestyle?

Swing trading hadn’t worked in his personal brokerage account, and buy-and-hold wasn’t working in his company-managed 401(k) or personal IRA account, so he wasn’t currently getting ahead at all. With his retirement imminent, Victor was determined to start growing his portfolio, and with the impending bear market, he had to find a different way to both protect his capital and grow his account.  

 So, Victor began scouring the internet and asking friends for different strategies. Another pilot told Victor about how his IRA performance improved by using asset revesting—even during the 2020 downturn. Never having heard of it before, Victor looked into it. What he found was that it was a different style of investing. He learned that asset revesting was an approach that involved protecting capital first and then growing accounts by identifying signals for downturns and moving assets to more promising investments before they occurred. This was tactical asset allocation that worked through an asset hierarchy when searching for the strongest revesting signal. Once identified, there were profit targets to set and protective stops to put in place to ensure the lowest drawdown would be 6% at max.

While he delved deeper, Victor realized that it was an investing plan very similar in effect to the flight plans he relied on daily, keeping him alive and well over his 40-year career. For all intents and purposes, there was a checklist to proceed through to ensure the best chance for survival and success. Now, here was something he understood, and Victor loved it!

Being a cautious fellow, Victor tempered his excitement by deciding to use asset revesting signals only in his personal brokerage account only. Back at the computer, he searched for an asset revesting newsletter he could learn more from. Upon finding one, he dove straight in and learned as much as possible. Victor used the asset hierarchy provided and also created another one for himself that included different ETFs and a T-Bill ETF to put his cash in when nothing on the hierarchy was heading up. He was skeptical that he should ever have his capital in cash, but he was dedicated to following the asset revesting guidelines to truly stress test how it worked.

What Victor found in short order was that multi-asset revesting helped shield his portfolio from the market’s worst downturns, as his assets were moved to cash or cash equivalents whenever stocks and ETFs were dropping. When the markets picked back up, Victor’s assets were moved to the asset revesting signal with the most growth potential. It wasn’t long before he moved his personal IRA away from the Fidelity advisor he’d been using and began managing it himself with his asset revesting strategy.

In time, Victor’s portfolio grew, holding only assets that were increasing in value and biting the bullet to get rid of the ones that were not. He planned that after his retirement, he would take over his company-managed 401(k) and apply asset revesting methods to that account as well. Until then, he slowly grew his personal accounts, and after a year and a half, he was able to put a down payment on the most beautiful plot of land, complete with a century-old farmhouse, barn, fields, pond, and forest. The vision he and his wife had held onto for all the years they’d been together was now on the horizon.