"Smart Cash" Approaching April 2011 ATH Levels --- Few Bargains to Choose From
The Bargain Stock Monitor is one of three market statistics used as performance expectation analyzers for Market Cycle Investment Management "Model Portfolios". It is derived from the Month End Value Stock Watchlist screening program which identifies Investment Grade Value Stocks trading at least 15% below their 52-week high, and that also meet the price selection criteria outlined in The Brainwashing of the American Investor: The Book that Wall Street does not want YOU to read.
The "15% down" break-point allows you to keep your eye on "Bull Pen" items. (You really need to be familiar with the selection rules to get the most from the BS Monitor - chuckle - and from the Watch List program.)
The fewer IGVSI equities at bargain prices, the stronger the market and the more Smart Cash that should be accumulating in the equity bucket of your portfolio. As the list of bargain Investment Grade Value Stocks grows (indicating market weakness), portfolio Smart Cash should be finding its way back into undervalued securities.
The BS Monitor clearly documents the cyclical nature of the stock market, as you can tell from the historicak data. Whenever the number of IGVSI bargain stocks shrinks to unusually low levels, a correction cannot be too far down the road. Patience is your "buzz word", as smart cash grows and account statements regain all time high (ATH) levels.
Your "Smart Cash" should have grown considerably in January as profit taking opportunities were --- well, Spectacular!
As for me, I'm hoping for a return of the short-term volatility that made 2011 so productive compared to normal market measurements --- in the long run, corrections are always a good thing, particularly the short and steep variety like we experienced last September. If you are following "the rules" properly, you should always be using the market's "up" volatility to capture reasonable short-term profits.
Yes that's right, you won't have any profits to speak of (short-term) if you weren't taking advantage of increasing buying opportunities during the correction.
If you have not been taking profits recently, one of these things happened: (a) You are being greedy, and continue to ignore MCIM profit taking guidelines; (b) You didn't have profits because you failed to make new equity purchases during the May through September correction; (c) You didn't want to be burdened with those short-term capital gains that will surely disappear --- yet again; (e) You think that this is the rally that will surely last forever.
NEVER LET THAT HAPPEN AGAIN. NEVER!
ACTION ALERT: Hold out for maximum profits in equities while the bargain stock list is so limited. On the income side, use the "year-or-more-income-in-advance" idea as a profit-taking guide AND reinvest the proceeds in similar securities which may or may not have better current yields.
Find out why by attending a Free Income Investing Webinar.
Remember to shed some underperformering securities when your portfolios again acchieve new Market Value Highs.
What's that all about? Check your copy of "Brainwashing".
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