Saturday, June 18, 2011

Click chart to enlarge

The above chart shows the model portfolio's return for each of the "BUY-NEUTRAL-SELL" signal periods since inception. The Strategic Growth Model takes its BUY-NEUTRAL-SELL timing signals from the DecisionPoint Thrust/Trend Model.

The most recent BUY period ended the week of 6/10/11. The model portfolio returned +28% for the 39 weeks of the BUY period, triggered 39 weeks earlier. This is equal to a 37% annualized rate of return.

The hypothetical returns reflect the performance of the new, improved Strategic Growth Model portfolio as described here a few weeks ago. Actual performance will vary.

The chart shows that the model portfolio declined -15% from its recent peak to the end of the BUY period. This is within the range we've seen for interim losses during the final phase of previous BUY periods. As noted here, the end of a BUY period is the riskiest point in the cycle as far as incurring an interim loss. For this reason, I've advised here that I'm holding more cash in my actual managed accounts than the model portfolio. This has proven to help protect capital that will be put to use during the next BUY period.

Since 4/29 peak, returns:
Model porfolio: -14.8%
Actual managed account: -8.2%

Now that the market has pulled back significantly and is well off its recent highs, the risk vs. return is much improved for investing fresh capital. Upon receiving the next BUY signal from the DecisionPoint Thrust / Trend Model, I intend to invest according to the target allocations shown.

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