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Contrary to popular belief and media propaganda, investing is not a competitive event. Rather, it is a uniquely personal and goal directed activity that individuals must organize and control for themselves. By definition, investing is a long-term enterprise best dealt with by using the fundamental principles of three disciplines: Investment,  Management, and Psychology

So as much as you love to hear quarterly growth numbers and comparisons with this or that average and index over short term blinks of the investment eye, you will not often be accommodated here.  

That said, I know that those of you who have not read "Brainwashing" want to see some  numbers. I  have complete 2008 figures produced by an outside agency, the broker dealer and custodian I serve as a sub advisor.

I also have 2009 unaudited figures through September 20th and a Peak to Peak analysis from June of 2007 through September 20, 2009.

If you are interested in seeing the spreadsheet, please contact me by email or through Linked-In.

As explained in The Brainwashing of the American Investor, analysis of quarterly, and other calendar year numbers, accomplishes little while generating transactions that most often damage the health and long term viability of the investment portfolio. Still, I recognize that everyone (else) does it.

The Investment Grade Value Stock - Portfolio Performance Expectation Analyzer

(Updated Monthly)

Performance statistics need to be apples-to-apples comparisons and no index alive will ever look like a properly diversified portfolio of investment grade quality, income generating, NYSE equities combined with an equally well diversified group of investment grade  income securities.

In other words, if you plan your Investment Program properly by creating an Asset Allocation Model that makes sense for you, and fill it up with investment grade securities, there is just nothing to compare with except your own personal goals. Whoa, that's the way it's supposed to be!

Most important of all for your investment comfort level is the development of reasonable expectations about the direction of your portfolio's market value, based upon what's going on in the world around it. Most investor's have difficulty making this leap.

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Here's something to think about: In spite of what the averages and indices told you to believe about the investment climate from 2000 into 2005, it is my opinion that there was no reason to lose money. Speculations bombed, as they always do eventually, but not quality investments. Similarly, the crash of October 1987 was, to date, the 2nd biggest investment opportunity of all time.

The "NO" magic formula:  No NASDAQ, No Mutual Funds, No IPOs = No Problem!

Similarly, there are three major realities in the Investment World that need to be understood before valid performance evaluation is possible.  

  • The Stock Market Cycle (peak to trough to peak or vice versa) has no relationship at all to a calendar year, 

  • The Interest Rate Cycle (low to high to low) has no relationship either to the calendar year or (believe it or not) the Stock Market Cycle, and 

  • The Economic and Business Cycles have no relationship to the calendar year either.

Don't discount these simplistic observations. Their meaning, when appreciated, can improve your future performance significantly. Like golf, investing should be kept simple. A complicated swing is as non-productive as gimmicky investment products, and a nine-hole fixation on score in the short-run causes mistakes just as surely as quarterly bottom-line performance analysis.

Wall Street thrives on your obsession with short-term market value changes.

So what is an investor to do if he isn't going to just follow the crowd (i.e., by ignoring all of the blatant inconsistencies between the basics of goal orientated Investment Management and the ridiculousness of the "performance- evaluation-by-the-averages", quarterly and annual  statistical fiasco)?

 The book to your left, and up a tick,  Chapter Seven, introduces and explains The Working Capital Model and how it makes Investment Portfolio Performance Evaluation more personal. 

Your equities are dealt with as dividend and capital gains producers; your fixed income securities as income generators; and your Working Capital  is supposed to go up every year ---  yes, if you are doing your investing properly, your Working Capital and your Base Income will almost absolutely grow every year. But you do need to understand the concepts and the terminology, so read the book.

Sanco Services, Inc. manages diversified equity and income portfolios, invested only in Investment Grade (NYSE) Value Stocks.  Sanco Services' CEO Steve Selengut developed The Working Capital Model. It, and Market Cycle Investment Management focus on things that the average investor seems to have lost sight of.

NOTE: Only a handful of professionals are qualified to manage your portfolio using this methodology, and I have "certified" all of them.  No professional should be using it without my blessing --- in writing. Please check with me before signing anything.

So when and if I do look at market value performance, it will almost never be for a conventional period of time --- especially if market value is all we have to deal with. In the late 90's, when the Pied Piper of greed was leading investor dollars into the NASDAQ "black hole" , many of the most conservative investors succumbed to the pressure, leaving their high quality portfolios behind as they joined the gold rush.

I have looked at market value performance figures for a group of people who stood their High Quality (no NASDAQ, no Mutual Funds, No IPOs) ground from November of 1999 (about four months before the bubble burst) through September of 2004 --- considered a total disaster area by Wall Street and the Mutual Fund Industry. Just think about how your experience would have improved with the "NO" MAGIC Formula mentioned above. (No, you won't find the numbers here, I just can't do it.)

The mid-2007 through 2008 debacle is still front page news, as investment portfolio Market Values have lost as much or more than they did in 1987 - - IGVSI stocks included. The Working Capital Model endures with minor operational changes. What it seems to do best is to keep investors focused on their  long term goals and objectives.

Before you evaluate performance, you need to form valid expectations. Before there can be valid expectations, there must be a basic understanding of securities. The stock market is, and always will be, a volatile place where even the best and most profitable companies can be expected to rise and to fall in market value. Similarly, income securities will always rise and fall in price as interest rate change expectations (IRE) change. 

The factors that affect these normal and generally harmless fluctuations are many and mostly unpredictable, so the investment task is to understand this and to work within it. For, as much as we may try, we just can't change Mother Nature ---  yeah, she's everywhere. 

The 2007 through 2009(?) Credit Crunch and related issues has had more of an impact on the market value of income generating securities than ever before. But most of the countless articles I've written on this concept hold up in today's very new environment. Those of you who develop an understanding of how equity and fixed income market prices react to events in finance and the world economy will fare best in the long run.. 

  • Try to create a portfolio that you can see through. What? (A portfolio where you can see and name individual securities.) Mutual funds are securities containers that you can't open up to understand what's inside.

  • Then, learn how to create a cost based asset allocation. Doing so will help you fine tune your selection criteria and lead to an understanding of valid performance expectations. 

  • Now you're ready to use The Working Capital Model for performance evaluation. Learn how and the job is done.

I've heard a rumor that adapting your financial swing to the Working Capital Model will actually improve the other (more important?) one... probably just a rumor.