The Investment Grade Value Stock Index - Continued

History of the Investment Grade Value Stock Index

The IGVSI was developed in December of 2007 to provide a benchmark for the Equity portion of MCIM portfolios managed using Working Capital Model (WCM) disciplines. For more than ten years, Investment Grade Value Stock investors had been frustrated by the inadequacies of the DJIA and the NYSE indices. During that period. NYSE Issue Breadth and New High vs. New Low Statistics moved in different directions than the averages, nearly all of the time.

Since 2005, the popularity of Closed End Funds (particularly the index variety) has altered the statistical playing field, making NYSE "market stats" nearly worthless in monitoring the behavior of Investment Grade Value stocks. There are fewer than 400 IGV stocks, yet the NYSE "issue breadth" numbers report trading of over 3,000 issues per day. Similarly, the "most advanced" and "most declined" lists contain an ever increasing number of indexed derivatives, making it difficult for IGVS investors to zoom in on their area of interest.

Hoping to answer the now ludicrous question: "whatever happened to stocks and bonds?", several old school diagnostics are presented here. The IGVSI chart tracks the most fundamentally sound companies on the planet. The IGVSI "Bargain Stock Monitor" analyzes the price levels of the index components to help you navigate the investment cycle for better decision making. IGVSI Issue Breadth and 52-week "High vs. Low" numbers help to complete the equity environment trend picture, and the "Expectation Analyzer" discussion will help you fine-tune your portfolio performance expectations.

Two other indices, the Working Capital Model Select Income (WCMSI) and the Working Capital Model Select Municipals (WCMSM) report on the movement of managed closed-end income funds of the type contained in Market Cycle Investment Management portfolios. They should help you fine tune your performance expectations about the income bucket of your portfolio.

All of these important numbers are presented for your use right here, but what you do with them is totally up to you.

Most investors misuse, even abuse, the statistics they have contact with. Perhaps the best example is fanatical worship of the DJIA (up less than 19% in 2009) as a performance monitor for all purposes, and all portfolios. Statistics are historical data, and none can actually predict anything. What they are best used for is to formulate performance expectations --- a skill that must be mastered for long-term investment success.

The IGVSI is a new index, but one that is becoming an accepted benchmark for assessing the performance of the "Equity Bucket" of MCIM-WCM investment portfolios.

The income portion of a portfolio demands separate attention, and a pretty much blind focus on income. Click here for a helpful article on that subject, or study Chapter Five of The Brainwashing of the American Investor "What Your Mother Never Told You About Income Investing". The WCMSI is presented with the IGVSI to give you a feel for what is going on in the income portion of your investment portfolio --- the WCMSM examines a sampling of closed-end Municipal Bond funds.

NOTE: Average performance of IGVSI, WMCSI, & WCMSM: 12/31/08 to 12/31/09 = 34.3% vs. DJIA + S& P = 21.5%