Steve Selengut developed the Market Cycle Investment Management (MCIM) methodology for managed asset allocation in the 1970s. The process combines risk minimization, base income generation, and disciplined trading strategies while focusing on the highest quality individual securities in the market place.
The concepts, strategies and disciplines of the MCIM process are documented, explained, and illustrated in Mr Selengut's books and articles.
Anyone can design and manage their own MCIM portfolio. As the investor ages, it's a simple matter to transition from the more aggressive 70% equity allocation to a more conservative 30% exposure. Depending on the tax status of the portfolio, either taxable or tax exempt CEFs should be used for the income portion of the portfolio.
For more information, Google Market Cycle Investment Management and Investment Grade Value Stock Index --- or search the article archive at Kiawah Golf Investment Seminars.
FREE online webinars are available for investors who want to take the "frantic" out of their investment experience. Independent financial services professionals may want learn more about the MCIM methodology, so that they can make it available to their clients.
Reasonable Performance Expectations using the Market Cycle Investment Management Methodology
Regardless of direction, all cyclical movements should be excellent investment opportunities for MCIM navigators. The program uses a methodology that befriends market and interest rate cycles, with volatility friendly strategies that logically could produce:
- Moves to cash before corrections take over from rallies because profit-taking disciplines kick in for each individual security as they rise between 7% and 10% above their cost basis. At the same time, buying guidelines prohibit the purchase of equities that are not IGVSI stocks down at least 20% from their 52 week highs. These two processes should produce high "smart cash" levels during rallies.
- Higher market value "lows" during corrections because portfolios include a base income floor produced by (a) an allocation of at least 30% of Working Capital to income-purpose securities plus (b) the additional income produced by every equity security in the portfolio, and (c) the likelihood that both income securities and Investment Grade Value Stocks will fall less in market value and rebound more quickly than securities of lesser quality.
Peak to Trough to Peak Analysis Around the Financial Crisis
- Annual growth of realized "base income" in all portfolios because cost based asset allocation dictates that either 30%, 50%, or 70% of every realized dollar of income will be reinvested as soon as practical in income-purpose securities.
- Faster movement to new market value highs when the market moves upward because (a) fewer new positions can be established until significant (20%) equity price erosion has occurred, making the manager more patient, (b) programmed additional income assures cash availability for security purchase throughout corrections, and (c) a selling discipline that makes the manager take smaller than target profits so long as buying opportunities are plentiful.
- No major disappearing "unrealized" profits because of a strict selling discipline.
- Reduction of analysis paralysis, appreciation of both rallies and corrections, and love of market volatility. Just because!
The past twelve years or so have included two major market cycles and one significant economic crisis. Study the methodology to see how well the Market Cycle Investment Management process just had to do during this interesting segment of financial history.
Peak to Trough to Peak Analysis From Before the Financial Crisis 'Till Now
All investors should become familiar with the Market Cycle Investment Management methodology and the strategies it employs to keep portfolios on track from start up to retirement.
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