Year End 2011 Bounce Continues In January for ALL Asset Allocations
No investor should ever be surprised by the changes in market value that appear on his or her monthly account statements. In general, media noise throughout the month should lead to a feel for what's been going on and investors should understand that security prices, particularly equities, are constantly changing.
Yes, the future is unpredictable, but understanding the past and how it impacts your unique portfolio, is essential to your long-run investment comfort --- and sanity. The IGVS Expectation Analyzer has been developed for MCIM investors who want to look at their account statements with a reasonable idea of what to expect.
Unfortunately, none of the mainstream information provided by Wall Street is geared solely to IGVS investors. In fact, there isn't one Broker Account Statement anywhere that properly presents asset allocation information for accounts that include income CEFs --- they focus on security type instead of on (the much more important) security purpose.
The IGVS Expectation Analyzer applies mostly to the equity bucket of your investment portfolio, and exclusively to Market Cycle Investment Management Portfolios. There's a lot more to the stock market than the DJIA or S & P 500, as evidenced by historical NYSE breadth figures from 1999 through August of 2007, when it became clear that an IGVSI was necessary.
The Expectation Analyzer has four elements. The information provided is purposely sketchy, and not intended as a prediction of anything. It is most relevant for portfolios with at least 60% invested in Equities. If you study The Brainwashing of the American Investor, you'll understand.
ONE: The Investment Grade Value Stock Index established a new All Time High on April 29th 2011, putting an exclamation point on a rally that started in March of 2009 --- the major Wall Street worshipped averages are still way under water. From their peaks in 2007, both the IGVSI and the WCMSI have out-performed the S & P 500 Average by a wide margin. See the "new" Peak-Trough-Peak Chart.
The IGVSI is above its level at the S& P 500's 2007 Peak --- the S & P itself is in the red by 15%! Income securities (CEFs) have outperformed the S & P (and the DJIA) as well. Equity portfolio market values should be approaching "ATH" levels, and income production continues strong from both "buckets".
TWO: The IGVS Bargain Monitor strengthened in January. There are just a few "bargains" to consider for addition to MCIM portfolios.
THREE: IGVS Issue Breadth Statistics were more positive than in December --- four of the last six months have been positive. In the same time frame, up days have exceeded down days by a thin margin.
FOUR: IGVS New 52-Week High vs. New 52-Week Low Statistics were strong throughout 2011. The number of new lows were the lowest since the ATH month of April 2011.
Negatives: There were none; typically a danger sign in and of it self --- keep your powder dry!
Positives: Index numbers were higher; market stats were strong;ativ; volatility calmed; profit taking opportunities abound; income levels remain above normal. Exciting, stable, and pointing dangerously upward.
Income CEFs continue to pay steady income, and their market values continue to out-performe the S & P 500, as they have for the past four years.
Working Capital continued to grow and base income production remained strong (neither are directly impacted by changes in market value). Income securities moved upward, while continuing to produce excellent yields.
"Smart Cash" levels should be higher than they were at the end of April, 2011 --- much higher than noemal..
Monthly Statement Prognosis: All equity-heavy portfolio market values should be higher for the month, and just barely below their April levels.
There is absolutely no reason to think that economic conditions will not improve over the long run, and still every reason to add to portfolios whenever prices fall into the "buy zone" --- that's the only known way to meaningfully increase your Working Capital.
SERIOUS NOTE: In all environments, always try to add more to your portfolio than you remove.
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