Just as investors were unable to perceive how a housing market crash would affect their investment portfolios, we believe similar, unanticipated risk exists in the stock market due to Federal Reserve asset price manipulation.

Want to grasp the counter-intuitive nature of investing? Try driving whilst looking to the rear (see lengthy liability disclosure below). Or, if that seems like a bad idea, carefully consider these probable outcomes: The counter-intuitive nature of investing is both perilous and unrelenting. After markets rise, we “feel” like there are more gains ahead. If gains continue, optimism increases. If

Stocks and bonds were a mixed bag in the third quarter. The S&P 500 increased 1.1%(i) for the quarter while other asset classes fared poorer. The MSCI EAFE (International) Stock index lost 6.4%, the Russell 2000 was down a painful 7.36%, and the Merrill Lynch High Yield Bond index declined 1.9%. Inflation protected bonds were also down. Toews began the

Toews began the quarter with a partial (1/3) allocation to US Stocks, with all other asset classes fully invested. We completed our exit out of US stocks in Mid-April. During the quarter, small cap stocks initially suffered losses while the S&P remained relatively steady. Stocks began to rebound and our system re-entered in late May. We finished the quarter fully

Investing platitudes (allocate, rebalance, repeat) about stocks betray the high risks and limited time horizons for the bulk of investors. The reason has everything to do with the way we price stocks. Small businesses, not listed on exchanges, sell for low multiples (example: 4 times earnings). But when companies grow and eventually go public, valuations average 15 times earnings. Instead