Sunday, August 3, 2008

Returns for the week ending 8/1/08

Strategic Growth Model (SGM) portfolio = -0.4%
Value of $10,000 invested at inception: $48,938

SGM portfolio is on a SELL signal, next week’s holdings:
1/2 of funds in RWM
1/2 of funds in CASH


  1. this portfolio is too heavy in commodities and energy sector.

    dont you think, staying in cash is a better option right now than putting money in a falling sector?

  2. Aramu,

    The model is susceptible to pull-backs (relatively severe in this case) during periods of heavy sector rotation such as this one... where capital is flowing out of the energy and commodity based sectors. Rather than attempt to predict capital flows the model will automatically rotate its funds into the best stocks in the new "ascendant" sectors. The model will always be a little behind the curve because it is based on historical (weekly) data. This week the model is selling 2/3 of its energy / commodity based stocks. In my real money portfolio I have been using SMN and DUG to hedge the energy/commodity stocks while using TWM to hedge the others, so my funds weren't as exposed to the recent sector rotation. While I am using a fairly mechanical approach here to manage emotions, it's still difficult to watch the prior gains dissipate during periods such as this. History shows that the model works over time. If history repeats, periods such as this, when the model has experienced a few weeks of pull-back, are an excellent time to add fresh funds to the portfolio.

  3. i agree that DUG would be a better hedge since the model consists mostly energy/commodity stocks.

    its quite possible strong dollar may continue on monday(not sure though) which means short commodity/energy....and maybe long equities, mostly techs like apple,rimm etc..

    unless of course we get a bad news...and it may become the reverse trade.

    if the short dollar trades get closed....dollar can go up another 5%, which means commodities/energy can go down a lot next week too.

    but i am not sure of anything...going to watch from the sidelines.


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