Insights

During the most recent quarter, the S&P continued its impressive rise and advanced 6.02%. Throughout the quarter, our proprietary models remained fully invested (with the exception of a 3 day partial sale out of Emerging Markets in some portfolios). In fact, we have remained fully invested in US and Developed International stocks since we entered the markets in late March

Investing in emerging markets has the potential to generate high returns and also bring potential diversification benefits. Our case for emerging markets is justified by four principal causes: · Emerging markets (EM) possess a high rate of growth of GDP relative to developed countries · Emerging markets are expected to be an increasing percentage of global GDP Emerging markets return

In our last commentary, we looked at the powerful nature of rebounds following large stock market drops. Our conclusion was that large stock market losses have historically been followed by significant moves higher. Historians will be heartened that, once again, history is repeating itself. During the 2nd Quarter, stocks had their best return since the 2nd quarter of 2003 with

Last November when the market declined sharply, a number of managers declared that the stock market had hit the bottom. Despite those declarations, stock market indices continued their descent to new lows in the first quarter of this year. From its peak in October of 2007 to its low in March of this year, the S&P 500 index fell over

Since the beginning of 2008 (the past 21 months) the S&P 500 has lost 25%. Yet, despite having lived through the most significant stock market decline since the great depression, almost all of the investors with our proprietary system have experienced double digit increases in their portfolios. In the chart below, we show our management returns on our aggressive portfolio.

In our third quarter commentary when we noted that the markets were down 20% year to date, little did we know that the most forceful declines were still to come. In October the stock market went into a free- fall as confidence in financial institutions evaporated. There were few places to hide as stocks, corporate bonds, REITS, and even commodities