Monday, April 25, 2011

The new and improved Strategic Growth Model

This chart shows the hypothetical performance of the new and improved Strategic Growth Model portfolio, since inception in May 2003 through April 22, 2011, including its performance during the different phases of the intermediate cycle (BUY-NEUTRAL-SELL).

The "old" model is shown for comparison, as is a 100% hedged model with no market timing, and the benchmark S&P 500 index.

The new model uses the crucial pillars of the retired model... the exact same stock selection criteria and the same timing model. The only change is in the way the timing model drives the portfolio's allocations to stocks, cash and inverse funds in alignment with prevailing market conditions.

The result is a model portfolio that has far greater weekly returns, more than compensating for an increase in its weekly volatility. It is largely uncorrelated with the market, even showing gains during the bear market of 2007-09. As I'll explain in another post, the timing model also greatly assists in managing the risk of a significant interim loss before the portfolio goes on to attain a new high water mark.

Enough for now.

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