Ever since high school, I wanted an MG. When my daughter started driving, I found a beautiful yellow 1969 MGB GT and, like so many dads, I purchased the car ‘for her’.

Long story (involving a choke and stick shift), I ended up with the car as a toy for about a year and a half. I loved driving the MG. I loved to down shift the gears when entering a curve and accelerating out of the curve. It was a real thrill.

How does this relate to investing?

Managing curves is an important part of an investment strategy. If you keep a constant speed you can overshoot the curve. I was reminded of this as I was reading, “Investing with the Trend…A Rules-Based Approach to Money Management” by Gregory Morris last week.

In the book, Mr. Morris has a chart titled the breakeven curve. The curve represents the percentage amount required to overcome a loss. In short, while a 20 percent loss requires a 25 percent gain to break even, a 45 percent loss requires an 81.8 percent gain to break even. The gain steepens with the loss.

Managing your portfolio in an attempt to minimize draw downs makes perfect sense. Especially for the retiree living off of their investments because withdrawals for income exacerbate the problem.

This leads us to buy and hold investing. Keeping your foot on the accelerator at the possible end of a bull market may cause one to overshoot the curve.

We are currently in the second longest bull market in history and the bull is looking tired. Factset states that the projected earnings decline of the S&P500 is -2.3 percent. If this is the case, it will mark the sixth consecutive quarter of declining earnings. We may be headed into a curve.

Gearing down makes sense.