Monday, June 16, 2008

Sectors and Styles Strategy Report: June 16, 2008

excerpts from this week’s report:

Model Growth Portfolio (MGP)

“The adage, “all good things must come to an end” applied to last week’s Model Growth Portfolio’s (MGP) performance as poor global markets’ performance stopped the MGP’s winning streak at seven weeks.…”

Model Growth Portfolio (MGP) Re-balancing

“No portfolio changes are being made at this time...”

ETF Market Monitor

Econ. Sectors & Industries: Selective areas had an extraordinarily rough week with Steel (SLX), Regional Banks (IAT), Semiconductors (IGW), and Telecom (IYZ) experiencing sharp declines.
Size & Styles: Growth continues to outperform value while large cap weathered the week better than the Smids.
Global: Strong declines everywhere save Russia.
Other: Commodities and Ag were the winners. All other indicators tracked had a strong down week.

Expected Return Valuation Model

“For the past two months, I have resisted lowering the risk adjustment factor despite the recent rise in the 10 US Treasury rate (see chart below) along with the modest narrowing of the credit spreads mainly due to the belief that credit crisis has a second wave waiting in the wings. However, it is more probable that the second wave will not occur until after the current US economic recovery driven by the fiscal and monetary stimulus has run its course. Moreover, the VIX has finally moved…”

Moving Averages Scorecard

“Last week’s late Friday rally in the US was too little and too late to offset the sharp deterioration in several global markets. Flipping to the downside were the EAFE (EFA), Europe 350 (IEV), and China (FXI). One would have to assume that the weakness in European issues was…”

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