Check out 4-Year, Peak-to-Peak, Drawdown and Recovery Numbers.
Both the S & P 500 and DJIA lag the IGVSI and neither has come close to 2007 All Time High levels --- the IGVSI established new high ground in April 2011.
The IGVSI is a barometer of a small but elite sector of the stock market called Investment Grade Value Stocks. Some IGVSs are included in all averages and indices, but even the "blue chip" Dow includes several issues that are well below Investment Grade --- very few boast an A+ rating.
IGVSI companies are B+ or better rated by S & P, dividend paying, and historically profitable. See The Charts & Numbers at ValueStockIndex.com.
The Working Capital Model Indices provide benchmark numbers for use with investment portfolios managed using the methodology described in "The Brainwashing of the American Investor: The Book That Wall Street Does Not Want YOU to Read".
Steve Selengut, author of "Brainwashing" and developer of the methodology inside, has referred to it for years as: The Market Cycle Investment Management Methodology (details at MarketCycleInvestmentManagement.com).
Comparing Market Cycle Investment Management (MCIM) component Indices with the S & P 500 confirms what you should expect. These quality based measures fall more slowly, don't bend as far, and regain their upward momentum more quickly than the S & P 500 --- they pretty much have to. But it gets better.
Because the MCIM operating system demands buying on weakness (and because all securities produce income), positions are increased and new positions are added while others panic. A true MCIM user would be taking profits during rallies, in preparation for the next inevitable downturn --- it's part of the methodology.
Investment Grade Value Stocks and high quality income securities - mostly CEFs - are the primary securities contained in Market Cycle Investment Management (MCIM) Methodology portfolios. Then, using disciplines that encourage profit-taking during rallies, and selective buying during corrections, it should be clear that market value performance should do better than brainless (passive, if you will) averages and indices.
Assuming that the average MCIM portfolio has an asset allocation of roughly 50% IGVSI equities and 50% MCMSI income closed end funds, it is very likely that such portfolios will do better over the course of a market cycle than most passive (lazy) investment strategies --- particularly in volatile market scenarios.
The figures speak for themselves, with the MCIMI being the combined IGVSI and WCMSI Indices:
9/30/07 - 3/9/09: MCIMI down 41% vs. S&P down 56% and DJIA down 53%
9/30/07 - 4/30/11: MCIMI up 2% vs. S&P down 11% and DJIA down 9%
9/30/07 - 12/31/11: MCIMI down 1% vs. S&P down 18% and DJIA down 13%
And, by the way, both the IGVSI and the MCMSI on their own, seriously outperformed both major averages during the same time periods, with the IGVSI establishing new All Time High levels in April, 2011.
9/30/07 - 3/9/09: IGVSI down 47% and MCMSI down 35% --- much less drawdown, peak to trough
9/30/07 - 4/30/11: IGVSI up 12% and MCMSI down 8% --- new All Time High in April, others still under water 10% at that time
9/30/07 - 12/31/11: IGVSI up 1% and MCMSI down 4% --- neither major average up, both down an average 15%
Now sit back and imagine how a Market Cycle Investment Management portfolio would have performed during these time frames (and any other true market cycle you can come up with) ---
What if you had bought IGVSI equities and high quality income securities every time the market fell, panicked, or hic-cupped? And then, what if you had the courage to take your profits each and every time they reached a reasonable profit level on an individual issue basis?
Now read that again and let your imagination (understanding?) take hold of your investment future.
Well that's exactly what happens in a portfolio managed using the principles explained in "The Brainwashing of the American Investor: The Book that Wall Street does not Want YOU to Read". Not to mention the added benefit of a consistent and constantly growing monthly cash flow.
Embrace the Market Cycle Investment Management Methodology; smile about your investment portfolio way more often.
No, it's not as sexy as Modern Portfolio Theory "hocus-pocus", and hardly an intellectual challenge. But unlike MPT, it works --- cycle, after cycle, after cycle...
