Wall Street Wisdom vs. Market Cycle Investment Management

Submitted by Steve Selengut | RSS Feed | Add Comment | Bookmark Me!

During every correction, I encourage investors to avoid the destructive inertia that results from trying to determine: how low can we go; how long will this last? Investors who add to their portfolios during downturns invariably experience higher market values during the next advance--- particularly if they focus on Investment Grade Value Stocks.

IGVS valuations have been trending upward for nearly a year; Market Cycle Investment Management portfolios are eclipsing the all time highs achieved in 2007, and income Closed End Fund values have risen with surprisingly high yields still intact. The investment gods are smiling once again--- but not on everyone.

Corrections are as much a part of the normal market cycle as rallies, and they can be brought about by either bad news or good news. (Yes, that's what I meant.) Investors always over-analyze when prices become weak and over-indulge when prices are high, thus perpetuating the "buy high, sell low" Wall Street lunacy.

Waiting for the perfect moment to jump into a falling market is as foolish a strategy as taking losses on investment grade companies and holding cash. Corrections in both equity and income securities produce the same kind of hysteria as a spring sale at Macy's--- but in reverse. Waiting for the perfect moment to bail out of a rising market is as foolish a strategy as buying the most popular stocks at 52-week and/or all time highs.

The fundamental quality of securities does not change simply because their prices rise and fall in response to market conditions. The investment gods work in surprisingly un-mysterious ways, and they get pretty annoyed when you don't pay attention to their teachings. When all value stocks are moving lower, it's an opportunity, not a problem. When all IGVS stocks are moving higher, it's also an opportunity--- an opportunity to capture reasonable profits.

During every correction, I'm amazed at the shocked reaction of the Media, the confused explanations from market gurus, and the poor advice streaming from Wall Street. It's no wonder that the average investor panics. If they could buy a new car, a new business suit, or a new house for half price, they would be ecstatic.

Only on Wall Street are lower prices villains and higher prices heroes. The Market Cycle Investment Management methodology understands the inevitability of both, anticipates cyclical changes, and takes advantage of market gyrations, big or small, and in either direction.

The equity securities in your portfolio are inventory, not fixtures. Inventory is best acquired at lower prices, marked-up a reasonable amount for quick sale, and replaced with new inventory--- and repeat the exercise as often as possible.

The income securities in your portfolio are fixtures--- and the highest quality ones last the longest and produce the best. Their purpose in your investment portfolio "business" is to generate the spending money needed for current expenses now, and living expenses later.

The calendar year has no particular investment relevance--- and if we tried hard enough, we could possibly do something about a tax code that rewards unsuccessful investments more than it encourages profits. Investment performance analysis should be an objective based program monitor instead of 365-day horse race with irrelevant market indicators.

Rallies and corrections could be looked at like children--- learn to love them equally and their parents (the investment gods) will reward you with stable long term market value growth within a balanced portfolio that produces annually increasing base income. (Can you tell me what "base income" is?)

There is an investment mindset solution for the problems that most people have dealing with corrections, recessions, inflation and the Red Sox. Bad news creates opportunities; so does good news. We have allowed Wall Street and the media to turn the process of investing into an endless series of circus sideshows.

The direction of the market isn't nearly as important as the actions we take in anticipation of the next directional change. Performance evaluation needs to be "rethunk" in terms of cycles. You need to overcome your obsession with calendar period market value analysis, and embrace a more manageable approach that centers on your portfolio's unique business model.

The Market Cycle Investment Management methodology seems to get people to where they want to be less stressfully and more consistently than the more "conventional wisdom" based strategies such as MPT--- and, you do want to keep the investment gods happy by appreciating their market cycle children equally.

Click Here to Speak With a Market Cycle Investment Management Expert

Click here to join my Private Mailing List

 


 
Market Cycle Investment Management
3912 Betsy Kerrison Pkwy
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509
Contact Steve directly for additional information: 800-245-0494

Please read this disclaimer:
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.


The Working Capital Model - Market Cycle Investment Management - FREE Mentoring Program

Professional Investor/Manager Steve Selengut, and an experienced panel of experts, walk you through the Market Cycle Investment Management (MCIM) portfolio management process. We'll hold your hand, answer your questions, and do everything we can short of security selection as you learn how to run your own (or your client's) portfolio.

The Mentoring Program is FREE, and includes:

  • The "Road To Success" Investment Training Program (minimum of 3 sessions)
  • The "Performance Investors Want & How to Get It" program (if applicable) 
  • The "Market Cycle Investment Management" program

The mentoring program is no longer private --- at least six people (all "Brainwashing" book owners) must attend each meeting.

Note:  Headsets will make the experience much more productive.

CLICK HERE TO JOIN MY PRIVATE MAILING LIST



Associated Content:
Income Security Price Volatility IS a Good Thing - MCIM portfolios always include an income purpose element of at least 30% of Working Capital and neve...
Six Year $100K Portfolio Performance Numbers - The IGVSI is a barometer of a small but elite sector of the stock market called Investment Grade Val...
Predicting Stock Market Movements - Wall Street institutions already spend billions predicting future price movements of the stock marke...
Market Ends June Near ATH; Income Closed End Fund Rally Stumbles - What happens in the future is unpredictable, but understanding the past and how it impacts your uniq...
New High Numbers Resume Gain in June... Rally Beast Seems to be Tiring - The New High and New Low issue stats can identify weaker and/or stronger sectors within the Investme...
Market Breadth Stronger - MCIM Portfolios Strike New Highs - IGVSI breadth statistics signal changes in direction within Investment Grade Value Stocks only --- a...
Bargain Stock Monitor Remains Stuck in Rally Mode - The fewer IGVSI equities at bargain prices, the stronger the market and the more Smart Cash that sho...
Risk Management, the Essence of 401k Investing - Risk minimization requires the identification of what's inside a portfolio. Risk control requires de...
Modern Portfolio Theory --- The Root Of All Evil - Clearly, the MPT creators were once Mutual Fund investors, looking for something better after years ...
The Market Cycle Investment Management (MCIM) Methodology - The MCIM methodology combines risk minimization, asset allocation, equity trading, investment grade ...

Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.