S & P 500 +8%; IGVSI +13%; MCIM +20%
By Steve Selengut,
Professional Investment Portfolio Manager
BA Business, Gettysburg College; MBA Professional Management,
Johns Island, SC, U.S.A.
sanserve at aol com
The Market Cycle Investment Management model has outperformed
the popular investment indices since it was first developed in 1970.
It features an approach that embraces market volatility; selects
securities using strict quality, diversification, and income standards;
and operates under strict disciplines for asset allocation, buying
securities, and profit taking.
Investment Grade Value Stocks (you may want to find out exactly
what they are) are the only individual equities acceptable for inclusion
in MCIM portfolios. Why haven't you heard about any of this -
because the Wall Street product factory developed none of it!
The Investment Grade Value Stock Index is a barometer of a small
but elite sector of the stock market. Some IGVSs are included in
all averages and indices, but even the "blue chip" Dow
Jones Industrials includes several issues that are well below investment
grade and few hold an A+ rating. Less than 50% of S & P 500
companies can boast about IGVSI membership.
IGVSI stocks are generally more stable, issued by more profitable
companies, and less speculative investments than any other equities
- at the moment, there are less than 400 of them. You would recognize
most of the company names, think of them as boring investments,
and be shockingly unable to find a single mutual fund of any kind
comprised solely of such high quality companies.
Yet since mid-1970, portfolios investing exclusively in IGVSs (MCIM
portfolios) have probably outperformed all other equity investment
models - So why haven't you heard about this? Because Wall Street
would have almost nothing to sell if everyone adopted this model.
IGVSI Rally Continues - Profit Taking Opportunities Take the Spotlight!
The IGVSI peaked at 900 in the summer of 2007, a few months before
the all time highs achieved by its far less selective index cousins,
the DJIA and S & P 500. The Market Cycle Investment Management
methodology prepared users for the inevitable onset of a correction
with its strictly disciplined profit taking and hyper-selective
purchasing strategies. "Smart Cash" was at near record
levels when the financial crisis came to town.
No market timing implications intended - reasonable profit taking
targets secure profits and a refusal to buy stocks when they are
within a certain percentage of their 52-week highs allows for patient
and selective purchasing while market corrections do their normal
retrenchment cleansing of excessive and speculative exuberance.
Profit taking opportunities have once again taken the spotlight
while pigs and amateurs rush to feed on securities that are at their
highest prices since the market averages peaked more than three
Why do investors keep chasing their tails on this buy at the top,
sell at the bottom treadmill, doing nothing either to create or
to preserve precious capital? Lazy, uneducated, ill-informed, misled,
gimmick or software addicted, brainwashed, conned, greedy, fearful.
The Market Cycle Investment Management methodology has been tested
dozens of times in minor market upswings and downturns. But it has
excelled in the three major market meltdowns of our investment lifetime.
In 1987, MCIM portfolios recovered totally from the October fiasco
in less than a year. In 2000, they experienced no downturn at all
while incredible carnage devastated NASDAQ no value stocks and the
mutual funds that worshipped them.
Why? How is that possible? MCIM portfolios never, ever, hold open-end
mutual funds, never purchase any form of IPO, and never invest in
NASDAQ traded securities. Thus, the dot-com bubble was a major non-event
for its smiley-faced users.
No one can deny that the June 2007 to March 2009 "financial
crisis" correction was different - perhaps scarier than anything
ever experienced before. NASDAQ is still below where it was in 2007
(and 50% of where it was in 1999). The S & P is 23% below its
2007 high; the DJIA about 20%; while the IGVSI is just 7% below its
all time highest level.
Many MCIM users have been achieving new all time highs for months.
It's time to walk away from the products, gimmicks, scams, hedges,
and theories that have made Wall Street rich at your expense. It's
time to reboot your onboard computer with some old-fashioned investment
programming designed to protect your portfolios from the excesses
brought about by fear, greed, and Wall Street panacea purveyors.
Studying Market Cycle Investment Management will bring you the
understanding, tools, disciplines, and disposition it takes to be
a successful investor.
What's in your portfolio?
Author of: "The Brainwashing of the American Investor: The
Book that Wall Street Does Not Want YOU to Read", and "A
Millionaire's Secret Investment Strategy"
Published - November 2010