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.