Sunday, November 29, 2009

A note from Steve re: 2010

I want to express how enthused I am for 2010!

As you may be aware, 2009 has been a challenging year for the Strategic Growth Model portfolio, this being the first year it has underperformed the broad market since inception. And it is NO real comfort that other hedge fund managers with a similar investment style have produced underwhelming results this year.

It's important to know that ANY systematic approach will have periods where it is in-synch with the market, and periods where it is out-of-phase. The MOST important thing is to keep our losses small during periods where the system is out-of-phase. In fact, I view THAT as our main accomplishment for 2009.

To this regard, the model portfolio is within 10% of its all-time-high made earlier this year, while the broad market remains more than 30% off its all-time-high made in Oct. 2007. For investors with a long-term horizon such as me and hopefully you, the model portfolio has performed very well over the market's full-cycle. THAT is our unswerving goal.

There are a host of reasons why the system has been out-of-phase, and I have appropriately adapted the system to better accommodate the once-in-a-generation conditions of this year should we ever see them again. (Hope NOT)

Over the past couple of weeks you may have noticed that the model portfolio is again holding its full complement of 10 stocks.

What's encouraging to ME is what I see under the hood, where the model's highest performing screens are again producing some high quality growth stocks for our portfolio. This gives me encouragement that the model portfolio may be entering another period of OVER performance, during what happens to be the strongest six months of the seasonal cycle.

I appreciate your continued patience and confidence. Please be assured that you are on the receiving end of my very BEST work. All of our liquid assets are invested alongside yours as we continue on this journey together.

Best wishes to you and your family for the holiday season and here's to a profitable 2010!

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