The idea that an investment portfolio can contain any number of unrelated speculations without itself being speculative is the stuff that Wall Street’s alternative investment purveyors are selling. True investment portfolios need none of this, and the numbers prove it true beyond any doubt. There is no need to fight or to counteract the market cycle, which is what alternative speculations try to do.

Easily managed, goal-directed investment portfolios should contain both equity and income producing securities — each with their separate purposes within the portfolio, and each with their own unique reactions to the same economic, political, and market stimuli.

The IGVSI, a true blue-chip index, didn’t fall as far as the DJIA or S & P 500, and has risen to a new all time highs far sooner. IGVSI based portfolios, long-term, have done better by far than the dot-com-replacing ETFs, precious metals, and currency futures.

The S & P 500 contains 165 more stocks than the IGVSI, but less than half are Investment Grade Value Stocks. Although it is more broad based, it is also more speculative, and has not done as well as the DJIA. Still 14.7% below the 2007 high, it would need to gain another 17.2% just to claw back to its 2007 level.

For the rest of the story: http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/5742

Steve Selengut

http://www.marketcycleinvestmentmanagement.com

http://www.valuestockindex.com

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”

The ETF owns every security in the underlying index, and it does so absolutely all of the time. There is no thought of profit taking — and no manager to do it.

Is it clear that weighted indices have little concern with diversification — and why should they?

These are not real investment portfolios. They are sector-tracking mechanisms that have been securitized as Wall Street gambling devices. The three ETFs contained 206, 100, and 142 positions, respectively, but each had roughly 50% of the market value in the top 10 holdings.

And who do you think is influencing the fund creator’s weighting judgment?

For the rest of the story: http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/18490

Steve Selengut

http://www.marketcycleinvestmentmanagement.com

http://www.valuestockindex.com

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”

Instead of rejoicing as the DJIA and S & P establish new three year highs, pay attention to some reality based numbers: together they remain about 15% below where they were at their October 2007 highs. Each would have to gain an additional 18% or so to break even with where they were more than three years ago.

Can a glimpse of the DJIA ever provide the kind of information you need to stay in tune with the market?

For the rest of the story: http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/5662

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Steve Selengut

http://www.marketcycleinvestmentmanagement.com

http://www.valuestockindex.com

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”

Here’s a collection of ten articles that will help you solve the income puzzle:

http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/18374

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Steve Selengut

http://marketcyclemanagement.com

Professional Portfolio Management since 1979

Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”

Falling income security prices are all the buzz in the financial media these days, but why does this translate into such fear and confusion? I saw a news report the other day that encouraged investors to abandon their income ship and sail away on a stock market steamer that has been cruising steadily higher for twenty months — the IGVSI equaled its September 2007 high on December 8th. 

And Lest we forget, the over-riding purpose of investing in income securities is, after all, the generation of income. That’s income, Alice, not growth in market value. Just income.

 Income securities, as measured by an index of high quality closed end funds (CEFs), remain roughly 50% above where they were at the bottom of the financial crisis and, more importantly, precisely within their normal price range of the past ten years. The most conservative CEFs are yielding from 6% tax-free to 8% taxable.

 There are at least eight reasonable explanations for recent price weakness — there are at least eight excellent reasons why investors should be viewing this weakness as a buying opportunity. Clearly, the financial press has not attended any of my seminars on income investing. Lower prices and higher yields are good news for income investors!

 One: Income security prices vary inversely with interest rate expectations (IRE) — eighth grade finance. After nearly two years of historical (hysterical) lows, the world expects interest rates to rise.

 Two: Rising IRE, regardless of its impact on the price of fixed income securities, has absolutely no impact whatsoever on the income generated by existing securities. In fact, in CEFs, it will eventually lead to higher payout levels when managers have access to higher yielding instruments.

 Three: The surging stock market has outsmarted most mutual fund managers, and rather than look stupid by holding income securities, they are taking losses in that area and “window dressing” their portfolios with equities that MCIM (Market Cycle Investment Management) investors are taking profits on. Inexperienced investors too, and too often, move from income to equity at precisely the wrong time.

 Four: Rumors about the weakness of individual state treasuries may lead to some downgrading of their bond offerings, and this certainly has added some pressure to municipal bond pricing — but there hasn’t been a significant Municipal Bond default since the WHOOPS fiasco of the early 1980s.

 CEFs contain hundreds of different issues, and defaults are not likely to occur when so many other fiscal alternatives are available. Perhaps the state employee unions will be forced to weaken their stranglehold on private sector worker pocketbooks.

 Five: As any MCIM practitioner would explain, income CEFs have been a bountiful landscape for profit taking as they rebounded from the price “haircut” of the financial crisis. By adding to positions during the 24-month decline, profits were quick to appear as prices rose to normal levels very quickly — profit taking has been replaced by other investors’ irrational loss taking, as CEF income continues unabated.

 Think of it like a sale at Target, but with bargain prices still 50% above where they were less than two years ago!

 Six: Recent speculation that Congress would raise income taxes led to increased demand for tax-free securities. Now, with that specter less likely, demand has lessened. As an aside, do you think they know (arguably) that every major tax cut in history has led to increased government revenues?

 Concurrently, State and Municipal bodies have been taking advantage of a new Federal government taxpayer pocket-picking program by issuing, taxable “Build America” bonds. Although they are forced to pay investors a higher rate of interest, the Fed picks up a third of it.

 This program reduced the supply of tax-free bonds, just when the potential tax increase was increasing demand. With a republican controlled house, it is less likely that this program will be continued, increasing the supply and reducing prices once again.

 Seven: CEFs, and the securities they own, are much less liquid than equities. Consequently, when there are more sellers than buyers (for whatever reason), prices will fall more quickly — and the impact on income? Nadda.

 Eight: During December and January each year, most CEF managements disburse their accumulated capital gains. This welcomed “bump-up” in income to investors is recorded in the market as a reduction in price as the cash is distributed to shareholders.

 So now you know why closed-end income fund prices, particularly for tax-exempt issues, have weakened. I look at it as a double Holiday bonus (or “gelt”, for those of you who know). Whether it is profit taking by MCIM aficionados, or loss taking by window-dressers; whether it is irrational “priceaholism” or simple issues of supply and demand — history tells us what to do about it.

 When prices rise, we take our profits, reinvest and increase our cash flow. When prices fall, we reinvest our unaffected (even increased) earnings, reducing cost basis while increasing yield on investment. Double your holiday pleasure with increased distributions and lower priced shares to choose from.

 Have you ever had so much fun? Who says income investing is boring!

 Steve Selengut

http://www.marketcycleinvestmentmanagement.com

Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”

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.

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.

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 high level.

Many MCIM users have been achieving new all time highs for months. What’s in your portfolio?

For the rest of the story: http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/16075

Steve Selengut

http://kiawahgolfinvestmentseminars.net

http://www.marketcycleinvestmentmanagement.com

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”

But what is hedging all about in the first place?

Conspiracy theorists have their hands in the air. What’s that? Portfolio hedging strategies were created to expand the market for the first generation of derivative products— options and futures contracts. Hmmm, not so far fetched an idea, really. Just back up a bit and think about what they are trying to accomplish.

Hedges are designed to massage your market value numbers, a kind of security blanket that softens the highs and lows of the market cycle. But why focus on the fluff of transient market values in the first place? Cycles eventually correct themselves without the unnecessary drama, guesswork, risk, and trading fees.

It’s not the market value of the portfolio that is of primary importance. It’s the actual content of the portfolio and how you deal with the natural dynamics of the securities you own. Why can’t the media reinforce that kind of stuff instead of the emotion of the month?

If a portfolio has a semi-guaranteed “base income” of 4%, a 4% cushion (or hedge) is always in place, one that grows annually with proper asset allocation management, and adds to the market value in upward cycles— nah, too simple.

For the “rest of the story”:

http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/6979

Steve Selengut

http://www.kiawahgolfinvestmentseminars.com/

http://www.sancoservices.com

Professional Portfolio Management since 1979

Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”

Many of the advantages of Closed End Funds are discussed below. It should be abundantly clear that this form of investment has eliminated nearly all of the drawbacks of conventional mutual funds. The two have very little in common.

Trading Liquidity – Flexibility – Cost: Closed End Fund shares may be bought or sold at any time during the trading day, just like common stocks, and share prices will fluctuate. They are excellent start up investment vehicles for smaller accounts where diversification would otherwise be difficult to achieve.

There are no penalties for leaving the CEF when the stock is sold. The only direct cost involved is the commission paid when buying or selling the shares.

For “the rest of the story”: http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/6938

Steve Selengut

http://www.kiawahgolfinvestmentseminars.com/

http://www.sancoservices.com

Professional Portfolio Management since 1979

Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”

The only reason for a person to assume the risks associated with investing is the possibility of achieving a higher rate of return than is attainable in risk free savings depositories for their capital (money). Investing is a get rich slowly process, conducted in an uncertain environment — one that must be understood and managed in a way that minimizes the risks involved.

The Working Capital Model accomplishes this by eliminating the need for impersonal comparisons with arbitrary and unrelated numbers and time periods. It works best with portfolios that are diversified among individual securities that are at the same time of high quality and income producing.

The key to successful investment management is Asset Allocation, the process of dividing the available investment dollars into two, and only two, buckets: equity investments and income producing investments.

All investment grade securities fit within one of these two classifications, based solely upon the primary purpose for their ownership. There are several key issues involved in successful Asset Allocation:

For the rest of the article, and links to Parts Two and Three:

http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/6886

Steve Selengut

http://www.sancoservices.com

http://www.kiawahgolfinvestmentseminars.net

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”

The Brainwashing of the American Investor ~Steven Selengut

From the end of 1999 through the end of 2009, all of the popular Wall Street market performance measurement tools were in the red. The average bloodletting level of the DJIA, the S & P 500, and the NASDAQ was a disturbing-to-some minus nineteen percent.

The Media has dubbed it “The Dismal Decade”.

Most of the investment community is either open-mouthed in shock or strident in blame about the somethings or someones who must be responsible for such horrific performance. Never again they swear to their clients— without ever a hint that they might themselves be the problem.

It won’t be long before the Wizards of Wall Street announce that they have studied the situation, and readied their sales minions to switch the shattered investment public into yet another fail proof (fool-magnet?) portfolio of hedges, gimmicks, signal responders, and panaceas for whatever the new decade brings.

Once again they will attempt to debug the market cycle and create an upward only future for the masses. Try not to be abused again— the markets aren’t broken, just the market shakers. Your portfolio should be up in market value— and not by just a little for the “dismal decade”.

These are the same geniuses that created the dotcom bubble by cramming valueless securities and speculative IPOs down your throats. They are the same charlatans who created the derivative markets and fraudulently hid their gaming devices in innocent looking rolls of tissue paper.

Wall Street thrives on the boom and bust scenario— because it doesn’t really matter to them how many of you win or lose. The evidence is clear; a boring-but-winning approach has been out there (and ignored) for three equally productive decades. The investment gods are outraged!

The past decade was a fabulous decade for old-fashioned value investors, particularly those with a reasonable selling discipline in their methodology!

It was a fabulous decade for those who understood that quality, diversification, and income generation are principles as opposed to media placating buzzwords.

It was a fabulous decade for those investors who were able to see over, beyond, and through artificial time constraints to find the long-term opportunities within every beautiful market cycle undulation. There were plenty of gyrations to gyrate to if you only knew how.

Investing is no longer a passive enterprise; and it never really was. If you can’t manage your portfolio throughout the market cycle, without succumbing either to greed, to panic, or to artificial and complicated hedging strategies, just stop. Right now. Listen and learn something old.

The only market cycle hedges needed are quality, diversification, and income— all classically defined. Throw in some disciplined selection and selling guidelines, a cost-based asset allocation formula, and a non-calendar year perspective and success will follow— cyclically.

You may miss a speculative spike or two (i.e., bubbles), but in the long run, Market Cycle Investment Management (MCIM) is a proven methodology for long run investment success.

You just can’t replace market cycle reality with calendar year gimmickry. Do better. Google investment grade value stock and request the ten-year MCIM numbers.

Change is good.

Steve Selengut

http://kiawahgolfinvestmentseminars.net/Inv/Search.cfm

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”