Sunday, July 12, 2009

Returns for week ending 7/10/09

Model portfolio, hypothetical returns for past…
1 week: -0.1%

Value of $10,000 invested at inception in 2003: $55,114


  1. Steve,
    Great blog, I have been following for several months. I was supprised last week when you were still on a "buy" and was eager to see what this week would show. So again I am suprised that you are still on a "buy". What do you think, any indication that we are getting any closer to going off a "buy" signal?
    I notice also that the returns have been getting flat, any take away from this?
    Again, great blog and I want to know you thoughts.

  2. Hi Joe,

    Glad you are enjoying the blog. The system's timing model is getting very close to throwing a SELL signal. Perhaps by the end of this week.

    Rather than attempt to anticipate the SELL signal, the model portfolio mechanically follows the timing model's signals as they come. In the meantime, I am comfortable with the portfolio in a fully hedged stance.

    The model portfolio hasn't participated in the most recent rally off the March lows. I attribute this to the character of the rally, which was fueled by short covering in the stocks that got hammered in the waterfall declines going into the March lows. The model portfolio invests in stocks with the strongest growth fundamentals. These stocks underperformed the market since the strongest performers were the financials, commodity, and the cyclical stocks that got trounced the hardest in the sell-off and were therefore poised for a snap back rally.

    This snap-back rally off a waterfall decline is the exception, not the norm, so I am not planning to tweak the model for a circumstance that I expect to be fairly rare, perhaps ocurring every 80 years or so.

    If this next correction is normal, then I expect our model portfolio to outperform as usual in the subsequent rally.


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