Returns for week ending 3/27/09

Model portfolio, hypothetical returns for past…
1 week: +0.1%
26 weeks: +20.1%
52 weeks: +36.1%

Value of $10,000 invested at inception in 2003: $55,638

Returns for week ending 3/20/09

Model portfolio, hypothetical returns for past…
1 week: -1.1%
26 weeks: +23.2%
52 weeks: +35.1%

Value of $10,000 invested at inception in 2003: $55,553

Returns for week ending 3/13/09

Model portfolio, hypothetical returns for past…
1 week: -5.9%
26 weeks: +21.7%
52 weeks: +34.8%

Value of $10,000 invested at inception in 2003: $56,171


The model remains on a SELL signal for NEXT week.

The portfolio holdings for NEXT week:
50% of funds in RWM (inverse fund)
50% of funds in Cash

Too Late to Panic?

This chart shows a picture of several bear markets. The bear market of 2007-09 is already the second most severe in history. And it is still well above the levels where the bear market of the 1930s eventually found support. To my eye, it appears that significant downside risk remains.

It is probably too late to panic because the market down trend is well extended past the mean. Because the model has detected poor market conditions, the portfolio has been in a net-short allocation for 7 out of 10 weeks YTD, and has profited from the market's decline.

There is a possibility that the market will bounce and perhaps rally strongly off the new lows set this week. If so we will give back some of our gains. But whether the market gives us a bounce or not, we must be prepared for the possibility that the market may decline much further before reaching the ultimate bear market low.

Rather than speculate on when the market trend will reverse, we rely on the data-driven Thrust / Trend Model to determine prevailing market conditions and then we align our capital to take advantage of the model's statistical edge. The model doesn't attempt to anticipate trend reversals. The market will tell us what it is doing and we will use our statistical edge to systematically generate returns over time.

As a result of this week's decline, the Dow reached a new bear market low. The Dow is currently down 53% since peaking in October 2007. To put the magnitude of the current correction in perspective, the chart illustrates the 15 worst corrections of the Dow since its inception in 1896. As the chart illustrates, the current Dow correction already ranks as the second worst on record. Only the correction that began in 1929 was worse.

The SGM model portfolio has returned +51% since the market peaked in October 2007.

Returns for week ending 3/6/09

Model portfolio, hypothetical returns for past…
1 week: +5.0%
26 weeks: +28.7%
52 weeks: +42.5%

Value of $10,000 invested at inception in 2003: $59,662

The model remains on a SELL signal for NEXT week.

The portfolio holdings for NEXT week:
50% of funds in RWM (inverse fund)
50% of funds in Cash