Model Age Curve Report Master Portfolio Performance Update
January 22, 2010
Current profit taking following President Obama's comments on bank reform has pushed the S&P 500 ETF (SPY) down below its 50-day moving average. The chart below shows that this has occurred twice before during the current "Monster Rally," once in July (7% correction), and in November (5% correction). In both cases markets bounced back to new recovery highs.
It is too early to say whether markets will climb (as expected–see second chart below) to new highs by April, or if this is the start of our expected market consolidation come early. We continue to tread a cautious path staying away from over-belived themes (China related), and concentrating on overlooked companies with price to sales ratios below 0.7, which we believe should offer protection if the short-term correction has indeed arrived early.
The model Master Portfolio is showing a return of 72.8 percent, and represents a 50.8 percent outperformance over the S&P Global Index ETF (IOO) since our "Generational Opportunity" buy signal of December 5, 2008.
The model's trend of outperformance is continuing into its second year from December 5, 2009 to January 15, 2010. The model is up 2.8 percent versus a small negative return of 2.7 percent for the S&P Global Index ETF (IOO).
Due to our caution, or concerns on sentiment and valuation, we have placed a stop-loss at 1080 on the S&P 500 or 108 on the ETF (SPY). At this point, we would look to shift to a more defensive portfolio stance to protect the model's capital. More details on this can be found in the 2010 outlook for markets in our recently released Age Curve Report "Outlook" issue.
Source: Ned Davis Research
Performance from 5th Dec. 2008 to 22nd Jan. 2010
Model Portfolio/Index |
Return% |
Var.% |
| Model Beacon Master Port. | 72.8 | |
| S&P Global | 22.0 | 50.8 |
| S&P 500 | 24.2 | 48.6 |
| Canada MSCI Index | 62.6 | 10.2 |
| UK MSCI Index | 34.5 | 38.3 |
| Commodity Index | 18.8 | 54.0 |
| US Bond Index | 5.1 | 67.7 |
Performance from 5th Dec. 2009 to 22nd Jan. 2010
Model Portfolio/Index |
Return% |
Var.% |
| Model Beacon Master Port. | 2.7 | |
| S&P Global | -5.7 | 8.4 |
| S&P 500 | -1.6 | 4.3 |
| Canada MSCI Index | -3.1 | 5.8 |
| UK MSCI Index | -4.4 | 7.1 |
| Commodity Index | -4.2 | 6.9 |
| US Bond Index | 0.3 | 3.0 |
