Sunday, October 12, 2008

Worst (Best) Week Ever

click to enlarge graph

I watched last week - and I suspect I was not alone - with shock and awe as the stock market all but disappeared into the greatest sinkhole of investment history.

The S&P 500 index was off 18% for the week, 43% for the 12 months. The Dow Jones lost 18% over five trading sessions, swelling its 12 month loss to 39.4%. Not in the 112 year history of the Dow Jones has there been a greater point or percentage loss in a single week.

On the other hand, the Strategic Growth Model (SGM) portfolio held up well under the severe stress of last week. The portfolio gained 8.8% because of its defensive stance. Due to poor market conditions, the SGM portfolio has been on a SELL signal since September 5th.

The above chart shows the performance of the SGM portfolio compared to the market benchmark since the beginning of October, 2007. The S&P 500 index has declined -44.3% while the model portfolio has returned +44.0%

The SGM portfolio has thus generated over +85% in excess returns over the past 12 months, with a maximum equity drawdown of -11.2%. This is an exceptional reward / risk in extremely difficult times.

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