Although there are nearly twice as many IGV stocks 15% below 52-week highs as there were at year-end, there is no evidence that a new correction has commenced--- tune in again in March or April.
The numbers are telling you that most Investment Grade Value Stocks are still well above bargain price levels, and no matter how much "smart cash" has accumulated in your portfolio, it's not necessary to re-load your portfolios with new stuff all at once. Like apples, one a day is just fine.
Most Market Cycle Investment Management (MCIM) Program portfolios are still a hiccup or two below the all time high profit levels achieved in 2007, but those with larger income allocations are generally well above those levels.
So, aren't you glad you've been taking profits and positioning yourself to take advantage of the new bargains sauntering down the runway? Take your time. Always start new positions slowly while you continue to take profits instantly.
The Bargain Stock Monitor is reporting a slight dip in Investment Grade Value Stock market values, but it is predicting nothing. What matters now is what you do with the paper profits that remain in your portfolio.
If you have not taken profits, one or more of these things has happened:
* You were greedy and reset your profit taking targets higher than 10%.
* You didn't have profit taking opportunities because you failed to take advantage of hysterically lower prices over the past two years.
* You didn't have profits because you were unable to add to your portfolio when prices were lower
* You didn't want to be burdened with short-term capital gains.
* You thought that the rally would last forever.
Yes, we are still in a rally, and the longer that we experience slow improvement over longer than monthly analytical periods; the less likely it is that the next correction will be as devastating as the last. But there absolutely will be another correction, and remember---
An ex-NFC team is certain to win the Super Bowl!
For your information, the Bargain Stock Monitor is one of three market statistics used as performance expectation analyzers in Market Cycle Investment Management portfolios.
A "WCM friendly" watchlist program identifies specific IGVSI companies trading at least 20% below the 52-week high water mark, and that also meet the price selection criteria outlined in The Brainwashing of the American Investor: The Book that Wall Street does not want YOU to read.
The fewer IGVSI stocks at bargain prices, the stronger the market and the more "smart cash" that should be building up in investment portfolios. As the list of bargain stocks grows, portfolio smart cash should be finding its way back into undervalued securities.
The other numbers used for MCIM portfolio performance evaluation are: The Investment Grade Value Stock Index itself (The IGVSI), IGVSI Issue Breadth, and new 52-week High vs. new 52-week Low numbers.
About the author:
My name is Ben C. and I am 2nd year MBA candidate at the Anderson School of Business at the University of California- Los Angeles. I have a BS in Economics from the Wharton School of Business at the University of Pennsylvania. Before coming to Anderson I worked as a generalist equity research analyst for Right Wall Capital, a long-short equity hedge fund located in New York City. Prior to working at Right Wall I worked as an analyst at Blue Ram Capital, another long-short equity hedge fund located in Rye Brook, NY. This past summer, I worked for West Coast Asset Management as a research analyst. West Coast, which was co-founded by Kinko’s founder Paul Orfalea, is run by well-known value investors Lance Helfert and Atticus Lowe.