Retirement Ready Income Programs

Stock Market Explodes After Trump Victory; Income CEFs Only Remaining Bargain

Submitted by The Investment Shadow | RSS Feed | Add Comment | Bookmark Me!

  • MCIM Market Values Feel Impact of Higher Interest Rates and Lower Income Taxes
  • Tax Free Income CEF Yields Move Higher as Prices Move Lower
  • MCIM Profit Taking Activity Rebounds... 
  • Bargain Stocks Gone; Equity CEFs Become a "Double Dip" Alternative to Money Market

When equity prices "bubble", many investors sell their safer positions to jump into stocks at "ATH" prices... when bubbles burst, safer securities thrive.

No investor should be surprised by changes in market value on monthly account statements. Media noise throughout the month should prepare you for what's going on.

The future is unpredictable, but developing reasonable portfolio expectations is essential to your long-run investment comfort --- and sanity. The Performance Expectation Analyzer has been developed for MCIM investors who want to better understand their monthly performance numbers.

NOTE: that no account statements present proper asset allocation information where there are income CEFs, REITs & MLPs, and even equity Sector ETFs; they also provide grossly inaccurate individual bond prices.

The IGVS Performance Analyzer applies exclusively to Market Cycle Investment Management Programs. It has four elements:

ONE: The IGVSI is 22.6% ahead of the S & P 500 over the past 9 years. (see the Peak-Trough-Peak Chart); 105% ahead thus far in 2016.

TWO: The IGVS Bargain Monitor fell sharply in November, ostensibly in celebration of the Republican victory. November's closing S & P was the highest number ever!

NOTE: The information provided here is not predictive of anything. It is most relevant for portfolios with at least 60% invested in Equities. Study The Brainwashing of the American Investor... you'll understand.

THREE: IGVS Issue Breadth Stats:  turned back into positive territory early in November

FOUR: IGVSI New Highs vs. New Lows: turned back into positive territory early in November

Negatives: None major, because MCIM portfolios thrive on volatility in both equities and income CEFs

Positives: Recent strength in IGVSI issues relative to the market as a whole; higher income availability in both equity and income CEFs

Long Term... only the shadow knows. But the market is clearly optimistic about the election results. Time will tell if recent negative trends in jobs, the economy, trade, and the general business environment can be reversed.

Income CEFs prices are now up just 4% in 2016 (tax free funds are negative): yields remain above 6.0% tax free, and average above 8.0% taxable. Working Capital and "base income" growth has been helped by strong profit taking activity.

Remember MCIMers: Working Capital and Base Income continue to grow with or without market value gains... is that cool, or what!  YES, even if the stock market plunges, Working Capital & Base Income should continue to grow so long as withdrawals remain lower than income.

Equity "Smart Cash" has found a new to replace the zero yield onf Money Funds/Bank Deposits ; equity CEFs are being used to offset shrinking individual opportunities... and to generate excellent income.

Monthly Statement Prognosis: Most "income" portfolio values have fallen, while all continue to produce outstanding income. 

BIG BUT: Income CEFs will continue to cut payouts so long as the government holds interest rates at historically low levels. Strategically, it's time to make sure you are not spending more than 70% of what you are earning.

SERIOUS NOTE: In all environments, always try to add more to your portfolio than you remove. Also, try to think of lower prices (in income CEFs for example) as opportunities instead of problems... that's always proven to true.

For more information, call 800-245-0494 or e-mail Steve (sanserveataoldotcom).

Retirement Ready Income Programs
2971 Maritime Forest Drive
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494
Please join the private article mailing list.

Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

Please join the private article mailing list or Call 800-245-0494 for additional information

Risk Management: Income, 401k, and IRA Programs

Take a tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:


In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 

Associated Content:
Asset Allocation Based Performance Analysis - One - It matters not what lines, numbers, indices, or gurus you worship, you just can't know where the sto...
A Must Read For Experienced And Novice Investors: 29 5-Star Reviews - A must read because you're in it! The book goes into depth on how to choose a diverse group of quali...
Risk Minimization, The Essence of Market Cycle Investment Management - The MCIM methodology combines risk minimization, asset allocation, equity trading, investment grade ...
What Investors Want & How To Get It: - What Investors Want and How To Get It... the between the lines content of The Brainwashing of the Am...
How To Minimize Risk: A Formula For More Productive Investing - Risk minimization requires the identification of what's inside a portfolio. Risk control requires de...
Ten Time-Tested Investment Portfolio Risk Minimizers - Most investment mistakes are caused by basic misunderstandings of the securities markets and by inva...
Create Reliable Income: 6% Tax Free; 7% to 8% Taxable - This program explains the process within Market Cycle Investment Management retirement income portfo...
Stock Market Issue Breadth Strong Since Trump Victory - IGVSI breadth statistics signal changes in direction within Investment Grade Value Stocks only --- a...
IGVSI Up 16% thru November; Twice the Gain in the S & P 500 - The IGVSI is a barometer of a small but elite sector of the stock market called Investment Grade Val...
Cruise Control Hedging: The Basics of Investing - Risk is compounded by ignorance, multiplied by gimmickry, and exacerbated by emotion. It is halved w...

Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.