Retirement Ready Income Programs

Investment Grade Value Stocks: August Market Statistics

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The Investment Grade Value Stock Index (IGVSI) was developed in December of 2007 to provide a benchmark for the Equity portion of Market Cycle Investment Management (MCIM) portfolios.

For more than ten years, IGVSI investors had been frustrated by the inadequacies of the DJIA and the NYSE indices. During that period, NYSE Issue Breadth and New High vs. New Low Statistics moved in different directions than the averages, nearly all of the time.

Since 2005, the popularity of ETFs has altered the statistical playing field, making NYSE "market stats" nearly worthless in monitoring the behavior of the elite 400 Investment Grade Value stocks. Issue breadth numbers report trading of over 3,000 issues daily; The "most advanced" and "most declined" lists contain growing numbers of indexed derivatives.

So whatever happened to common stocks as an investment medium? Several old school (no derivatives) diagnostics are presented for your use at valuestockindex.com.

The "Bargain Stock Monitor" analyzes the prices index components to help you navigate the investment cycle for better decision making. Issue Breadth and High vs. Low numbers help complete the equity environment picture; the Expectation Analyzer helps fine-tune performance expectations.

Two other indices, the Working Capital Model Select Income (WCMSI) and the Working Capital Model Select Municipals (WCMSM) report on the movement of managed closed-end income funds. They should help you fine tune expectations for the income bucket of your portfolio.

The following "headline" links have two purposes: to direct you to discussions of the current month's statistics, and to facilitate you passing them along to your Twitter, Linked In, and Facebook contacts.

IGVSI (Quality) up 22% since 2007 Peak; S & P (Not So Much) 7% http://valuestockindex.com/vsi/Display.cfm/18447

IGVSI Bargain Stock Monitor Grows - Is The Equity Rally Over? http://valuestockindex.com/vsi/Display.cfm/18451

Worst IGVSI Issue Breadth Numbers Since May 2012 & July 2011! http://valuestockindex.com/vsi/Display.cfm/18450

2013 High-Low Stats Weaken Slightly - Winning Streak Enters 24th Month http://valuestockindex.com/vsi/Display.cfm/18454

Equity Rally Stumbles... Income CEF Prices Firm... Slightly http://valuestockindex.com/vsi/Display.cfm/18449

See the Investment Grade Value Stock Index "Peak to Peak" Chart http://www.sancoservices.com/Sanco/MCIMvsSP500.xls

Seven Year IGVSi and Income Closed End Fund Tracking Chart http://www.sancoservices.com/Sanco/IGVSIndex.xls

Investment Grade Value Stocks and high quality income CEFs are the only securities included in Market Cycle Investment Management (MCIM)  portfolios. Then, using disciplines that encourage profit-taking during rallies, and selective buying during corrections, it should be clear that market balance performance should do better than brainless (passive, if you will) averages and indices.

Assuming that the average MCIM portfolio has an asset allocation of roughly 50% IGVSI equities and 50% MCMSI income closed end funds, it should be clear why these portfolios might just blow away all forms of passive investing --- especially in volatile markets. The figures speak for themselves: MCIMI represents the combined IGVSI and WCMSI Indices:

  • From 9/30/07 to 3/9/09: MCIMI down 41% vs S&P down 56% and DJIA down 53%
  • From 9/30/07 to 4/30/11: MCMI up 2% vs S&P down 11% and DJIA down 9%
  • From 9/30/07 to 12/31/11: MCIM  down 1% vs S&P down 18% and DJIA down 13% 

Both the IGVSI and the MCMSI, individually, outperformed both major averages during the same time periods. The IGVSI  first established new high ground in April, 2011 --- Income CEFs had done so regularly since July 2012, but have faltered recently as is typical just before market corrections.

The latest IGVSI ATH was set August 2nd 2013; the latest WCMSI ATH was struck November 30 2012 --- the major indicators were not nearly as strong...

Now sit back and imagine how a Market Cycle Investment Management portfolio would have performed during this time frame (and any other market cycle) --- what if you had bought IGVSI equities and high quality income CEFs every time the market fell, panicked, or hic-cupped? And then, what if you had the courage to take your profits each and every time they reached a reasonable level on an individual issue basis?

Well that's exactly what should happen in a portfolio managed using the principles explained in "The Brainwashing of the American Investor". Not to mention the added benefit of a consistent and constanly growing monthly cash flow....

Embrace MCIM, and smile way more often. Contact John Dohn for more information about the process.


 
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
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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:

CLICK HERE

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.

https://www.dropbox.com/s/b4i8b5nnq3hafaq/2015-02-24%2011.30%20Income%20Investing_%20The%206_%20Solution.wmv?dl=0

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. 



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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.