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. Other portfolios that are less aggressive may have had returns which are lower due to a higher bond allocation (please refer to your attached statement).
During the most recent quarter, the S&P advanced 16%. That makes this the 2nd quarter of robust growth since stocks bottomed out on March 9. Our proprietary models remained fully invested during the entire quarter.
*Results above show performance for the Toews IRMS Aggressive Growth Portfolio to illustrate the effect of Toews management on US and Intl. Stocks. Performance of individual accounts will vary based on your investment risk profile and your specific investment funds. For your individual account performance please refer to your statement included with this commentary.
Where is the Stock Market Headed Now?
The forth quarter is historically a very good one for the stock market. If the advance continues through this year, it will produce the best returns for the US stock market since 2003 (or before). However, after the robust gains in the past two quarter, stocks may retreat. With our system, remember that even if the stock market moves lower, this may create the possibility for gains. As we’ve stated before in this commentary, declining markets can potentially produce profits for our investors. First, by remaining in money market funds during the duration of the decline, we help avoid losses. Second, declining markets can increase our investors’ chances for gains.
As the stock market moves lower, our target point for buying back into stocks moves lower too. That means that as the market moves down, we have the opportunity to buy back into stocks at bargain prices, potentially setting the stage for fresh gains (see chart on page 1).
So, while you might be inclined to share in the sense of panic when you hear about big declines, remember that these declines may improve our chances for profits.
Winning by Not Losing
We have two basic objectives with our management strategy:
1. Provide above inflation returns for our investors
2. Attempt to limit losses
Avoiding big losses profoundly affects investor’s portfolios– and their lives. Avoiding a majority of the losses last year has allowed many of our investors to continue with their savings and retirement plans intact.
Incorporating a loss avoidance strategy also provides investors with the confidence that they need to stick to their investment strategy despite the many challenges confronting our economy. We hope that you find some piece of mind knowing that our investment strategy is actively attempting to avoid losses in order to further your goals.
Prior performance is no guarantee of future results and there can be no assurance, and individuals should not assume, that future performance of any of the portfolios referenced will be comparable to past performance.
There can be no assurance that Toews will achieve its performance objectives.
This document refers to the performance of the majority of Toews portfolios to illustrate the effect of Toews management on US and intl. stocks and high yield bonds. Performance of individual accounts varied based on the client’s investment risk profile and their specific investment funds. For your individual account performance, please refer to the enclosed quarterly statement or the quarterly statement recently sent you. In addition, not all model portfolios were referenced in this letter. It is not, nor is it intended to be, a comprehensive accounting of Toews asset management. There are other portfolios that Toews manages that performed differently than what is referenced in this letter.
This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
This article is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice. Please contact your investment adviser, accountant, and/or attorney for advice appropriate to your specific situation.