Friday, July 8, 2011

Returns for week ending 7/8/11

Returns for the past week:
Model portfolio: +2.1%
Actual managed account: +1.6%

Value of $10,000 invested in model portfolio at inception in 2003: $294,593

The gap between the actual managed account's returns and the model portfolio's hypothetical returns is mainly due to tracking error. Because the hypothetical returns are based on Friday's closing prices, while the actual managed account executed its trades early Monday morning after the market had already made some gains, the actual managed account was able to capture about 75% of the hypothetical gains this week.

The Window of Opportunity (WOO) is still open. This remains an opportune time to put capital to work in the model portfolio if you haven't already done so. History shows that last week's BUY signal ushers in a short period where the probability of significant gains is high, while the risk of a significant periodic loss is lower than usual.

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