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 Stock Market is a dynamic place where investors can consistently make reasonable returns on their working capital if they comply with the basic principles of the endeavor AND if they don’t measure their progress too frequently with irrelevant measuring devices.

The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail(s): a stock market that only rises and a bond market capable of paying higher interest rates at stable or higher prices — just not going to happen.

This is mythology, not investing. Investors who grasp the realities of these wonderful marketplaces recognize the opportunities and embrace them with an understanding that goes beyond the media hype and side show performance enhancement barkers.

Through the application of a few easy to memorize rules, you can plot a course to an investment portfolio that regularly achieves higher market value highs and (much more importantly) higher market value lows.

Five simple concepts of Asset Allocation, Investment Strategy, and Psychology are summed up quite nicely in what I call “The Investor’s Creed”:

For the rest of this article, go to:

http://kiawahgolfinvestmentseminars.net/Inv/index.cfm/5663

Steve Selengut

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”

Odds are the huge rebound since March has run its course. And even though it yields nothing, it’s time to raise cash.

Robert Lenzner

Nothing is screamingly cheap. The easy money has been made in both equities and fixed income. From the low point in March, it seems you can’t pick an asset class that hasn’t gained something in the area of 60%. That was some fear discount back in March.

During this universal recovery, as in most post-recessionary periods, lower-quality high-yield bonds have outperformed quality issues, and lots of smart guys who had the guts and money to buy them at the depths are cashing out–convinced that risks of continued exposure outweigh possible rewards of staying long.

“It’s past the time to lighten up, no reason to chase risk assets from currently lofty valuations,” says Paul McCulley, managing director at Pimco. “To the contrary, the time has come to begin paring exposure to risk assets, and if their prices continue to rise, paring at an accelerated pace.”
That’s what Guardian Life Insurance chief investment officer, Thomas G. Sorell, has been doing with his $30 billion portfolio after unexpected gains of 50% in high-yield bonds and leveraged bank loans that he purchased at distressed levels. The problem is that the yield on cash is zero. Cash is trash right now, and promises to continue to be.

Money market funds, according to latest numbers, are down half a trillion on the year. Stock mutual funds have drawn a measly $5 billion, while taxable bond funds have drawn almost $250 billion, and municipal bond funds $60 billion.

The big winners since the stock market bottomed in March have been emerging-markets stocks, up a stunning 99% on the iShares MSCI EAFE Index. Corporate junk bonds are up 50% as measured by the iShares iBoxx High Yield Corporate Bond ETF, while the iShares iBoxx Investment Grade Corporate Bond fund is up a comparatively modest 21%.

The truth is that few investors have taken the risk of equities. Most have taken a more conservative route, though the payoff has been commensurate with stocks. Even some municipal bond funds are up double-digits in the past year.

The reason is that the Fed has resolved to maintain “exceptionally low levels of the Federal funds rate for an extended period.” The yield spread is steepest in a very great time, allowing traders to borrow dollars at zero cost to hold securities yielding anywhere from 3.4% on 10-year Treasuries to 6% to 8% on riskier corporate paper.

So, what to do? Guardian Life’s Sorell is putting money to work at 5% in residential mortgage-backed bonds with three- to four-year maturities–a risk worth taking. He’s also ventured more bravely into 10-year BB corporate bonds yielding 8%–good if you feel comfortable taking the risk. That’s kosher for life insurance companies that can afford to hold to maturity.

In the bigger picture, though, there’s a major disconnect between stocks and Treasuries. Stocks are predicting a V-shaped recovery, while bonds are forecasting a more subdued U-shaped recovery–maybe even the dreaded W brand of a double-dip recession. I’m going to give greater weight to the clues I’m getting from the bond market, for I learned a valuable lesson in 2007 to scrutinize the credit markets as a hint of what’s in store for equity markets.

Yes, there is euphoria baked into the prices of gold and oil, and money is pouring into Asian markets threatening another possible bubble. Behind all the combustible elements that could trigger inflation are still sizable deflationary forces, like the potential disasters lurking in commercial U.S. real estate. Stock market bulls do not see the bearish signals being sent by the vulnerable part of the credit markets. Is there a trillion-dollar meltdown coming in commercial real estate, or has it already been discounted?

We are back to levels seen in 2007 and early 2008 in some credit markets, as represented by the action in the residential mortgage-backed bond index, ABX, a prime indicator of the credit quality of subprime real estate loans. The ABX Triple A index is only 31 cents on the dollar, having fallen 50% since May, contrary to the euphoria in equity and bond markets.

Even more worrisome is the Armageddon reading for the commercial real estate index, CMBX. The cost of protecting non-investment-grade mortgages on commercial projects has skyrocketed to 3250 basis points, more than three times greater than the cost of insuring commercial real estate loans back in June. It translates into an annual $3.2 million premium for insuring $10 million in real estate.

There’s also the peril of prolonged U.S. budget deficits. We’re talking about the long-term financial deterioration of the United States. Look at the Fed’s total net borrowing and lending in credit markets. The numbers of the domestic nonfinancial sector are down by over a trillion dollars; the private sector is deleveraging.

Meanwhile, the public sector–state, local and national governments–are adding debt. What does it mean if the U.S. loses its triple-A credit rating next year? Or if its $12 trillion in outstanding government securities become rated “junk bonds.”

Consider that the present value of Uncle Sam’s liabilities, including Social Security and Medicare, is four times the value of the nation’s economy. The cost of servicing that debt could be $2.5 trillion, according to William Cline of the Peterson Institute. That $2.5 trillion is equal to the nation’s entire cost of health care today.

Opines Richard Clarida, Pimco global strategic adviser, “The relative attractiveness of U.S. assets has [declined] and will likely continue to decline, and global investors may seek to rebalance away from their 60% increase in their net exposure to U.S. assets that occurred in 2008. This is negative for the dollar, and also likely negative for the relative performance of U.S. equities.”

So, if you trust the fellows who manage one of the largest accumulations in the world of other people’s money, you should bloody well not be greedy. Take your large profits that seemed hard to imagine a year ago.

The markets may have more run in them due to all the cash on the sidelines and the bullish sentiments evident on blogs and cable television.

But the bottom line is that it’s getting very hard to find obviously undervalued shares, or other assets for that matter. Don’t obsess right now about getting zero income; it’s better than double-digit losses.

Odds are the huge rebound since March has run its course. And even though it yields nothing, it’s time to raise cash.

Robert Lenzner

About Robert Lenzner

Nothing is screamingly cheap.

The easy money has been made in both equities and fixed income. From the low point in March, it seems you can’t pick an asset class that hasn’t gained something in the area of 60%. That was some fear discount back in March.

During this universal recovery, as in most post-recessionary periods, lower-quality high-yield bonds have outperformed quality issues, and lots of smart guys who had the guts and money to buy them at the depths are cashing out–convinced that risks of continued exposure outweigh possible rewards of staying long.