NOTE: This website is purely informational --- nothing is being recommended or guaranteed. "Brainwashing" book readers should find the numbers and ideas presented here helpful for analytical purposes. Click here for more information.
IGVSI ended 2012 6.3% above the 2007 Peak; The S & P 500 was still 6.6% below its All Time High
The S & P 500 finally achieved a new All Time High on March 28 2013 --- an annualized ROR of .51%... inpressed? The IGVSI has grown 3.51 per year, or roughly 7 times the rate of the S & P... impressed?
The IGVSI tracks an elite sector of the stock market, Investment Grade Value Stocks. Some IGVSI companies are included in all averages, but no other measure follows only the very highest quality companies traded on the New York Stock Exchange. Only 348 companies meet IGVSI quality standards.
See The Latest Working Capital Model Index Chart & Numbers
The WCM indices provide benchmark numbers for investment portfolios managed using the Market Cycle Investment Management methodology, as detailed in "The Brainwashing of the American Investor". Steve Selengut, author of "Brainwashing", developed the methodology in the early 1970s, using his own investment portfolio.
Toward the end of April '11, the IGVSI was 6.9% ABOVE its 2007 all time high while the S & P remained more than 13% below October 2007 levels. Today, the S + P is 5% above 2007 ATH levels, compared with 21% for the IGVSI.
Comparing Market Cycle Investment Management (MCIM) component Indices with the S & P 500 confirms that quality based portfolios should typically fall more slowly, not bend as far, and regain upward momentum more quickly than the S & P 500.
LIVE INTERVIEW: Investment Management expert Steve Selengut Discusses MCIM Strategies
Because the MCIM operating system demands buying on weakness, positions are increased and new positions are added while markets weaken. A disciplined MCIM user takes profits during rallies, in preparation for the next inevitable downturn --- it's SOP.
Using MCIM, one would expect new all time high market values well before the averages and indices revisit their previous highs, with portfolio income growing as the process plays out.
Investment Grade Value Stocks and high quality income CEFs are the only securities included in Market Cycle Investment Management (MCIM) portfolios. Then, using disciplines that encourage profit-taking during rallies, and selective buying during corrections, it should be clear that market balance performance should do better than brainless (passive, if you will) averages and indices.
Assuming that the average MCIM portfolio has an asset allocation of roughly 50% IGVSI equities and 50% MCMSI income closed end funds, it should be clear why these portfolios might just blow away all forms of passive investing --- especially in volatile markets. The figures speak for themselves: MCIMI represents the combined IGVSI and WCMSI Indices:
- From 9/30/07 to 3/9/09: MCIMI down 41% vs S&P down 56% and DJIA down 53%
- From 9/30/07 to 4/30/11: MCMI up 2% vs S&P down 11% and DJIA down 9%
- From 9/30/07 to 12/31/11: MCIM down 1% vs S&P down 18% and DJIA down 13% (The trend continues.)
Both the IGVSI and the MCMSI, individually, outperformed both major averages during the same time periods. The IGVSI first established new high ground in April, 2011 --- Income CEFs had done so regularly since July 2012, but have faltered recently as is typical just before market corrections.
The latest IGVSI ATH was set April 30 2013; the latest WCMSI ATH was struck November 30 2012 --- the major indicators were not nearly as strong...
Now sit back and imagine how a Market Cycle Investment Management portfolio would have performed during this time frame (and any other market cycle) --- what if you had bought IGVSI equities and high quality income CEFs every time the market fell, panicked, or hic-cupped? And then, what if you had the courage to take your profits each and every time they reached a reasonable level on an individual issue basis?
Well that's exactly what should happen in a portfolio managed using the principles explained in "The Brainwashing of the American Investor". Not to mention the added benefit of a consistent and constanly growing monthly cash flow....
Embrace MCIM, and smile way more often. Contact John Dohn for more information about the process.
Now doesn't this make a whole lot more sense than the hocus-pocus of "Modern Portfolio Theory"? It may not be as scholarly, but it sure should work better.
Click for Details --> IGVS - Part 2
(c) 2013 by Kiawah Golf Investment Seminars