Submitted by Steve Selengut
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Investment Grade Value Stock Bargains - The Last Ten Standing
The IGVSI Bargain Stock Monitor is one of three market statistics used as performance expectation analyzers for Market Cycle Investment Management portfolios. The value stock watchlist screening program identifies stocks that are trading at bargain price levels. At September's close, only ten bargains remained.
The fewer Investment Grade Value Stocks at bargain prices, the stronger the market and the more Smart Cash that should be accumulating in the equity bucket of investment portfolios. If you were not taking profits in September, you really need to re-think your approach to investing.
A failure to "smileyfacedly" pounce on profits when your portfolio market values are at or approaching all time high profit levels indicates one of the following:
(a) You are being greedy, and are ignoring basic Market Cycle Investment Management (MCIM) profit taking guidelines; (b) You don't have profits yet because you failed to make new equity purchases during the last correction; (c) You don't want to be burdened with those evil short-term capital gains, and would rather make your accountant happy with some solid capital losses instead; (d) You feel entitled to have a rally that will last forever.
Following the Bouncing Ball
In 2009, the Bargain Stock Monitor signaled the end of the twenty month, financial crisis correction. At year end only 15 issues in the entire IGVSI universe were at bargain price levels --- lower than just before the crash of 1987. Today there are only ten.
MCIM portfolios attained three year high levels in early May, and were, by discipline and design, well positioned to pounce on a growing list of bargains that developed through June. July brought instant winners in all quality investment arenas, but in less than a finger snap, August took them away --- unless you followed the MCIM profit taking rules.
Sell ~ Buy ~ Sell: An IGVSI Trader's Delight
Buy the end of August, there were 120 bargain stocks ripe for selecting, while many investors threw up their hands in disgust, tired of the very volatility that MCIM investors thrive upon. Market Cycle Investment Management users took profits in July, reinvested broadly during August and repeated the profit taking process throughout September.
Based on active (70% Equity/30% Income) model portfolios, users of MCIM techniques, strategies and processes could well expect gains of roughly 14% through September, vs. an S & P 500 that has just barely achieved positive territory. That's 14% or so in nine months while investing in the highest quality companies on the planet and minimizing the risk even further with at least 30% of the portfolio in income purpose securities --- both taxable and tax exempt!
There's another, maintenance-type, function that needs to be dealt with when portfolios vault to new all-time-high-profit levels: its time for those essential, but ever painful, ATH decisions.
What's that all about? Check the Glossary of Terms in the back of "The Brainwashing of the American Investor" --- now at bargain basement prices at Amazon.com.