Here is the Sage Investment Strategies weekly update on April 24, 2009:

Results through 4/24/2009

Market Highlights
S&P 500 Index off 0.4% 
The S&P 500 Index (symbol: ^GSPC) pulled back slightly, closing down 0.4% to 866.23. The Index is up 29.9% since its most recent low of 666.79 on March 6, 2009. Representing the weighted value of 500 large publicly held U.S. companies and a bellwether for the U.S. economy, the index is down 38.0% from a year ago and down 45.0% from its October 11, 2007 peak of 1,576.09. Since the market’s peak the index has been on a tumultuous roller coaster ride punctuated by sharp zig-zag movements. Over the past 52 weeks alone the market has tumbled as much as 53.1% peak-to-trough on a weekly basis. While some market observers believe the bottom is behind us, others claim this is simply a bear market rally driven by speculators who had massively shorted stocks and recently unwound their positions by buying back the stocks. Meb Faber points out that in the 1930’s bear market there were five stock market rallies of more than 20%, including a 48% rally after the initial cliff-dive. 

Market volatility holding
The CBOE Volatility Index (symbol: ^VIX), a popular measure of anticipated stock market volatility, ranged between 33.94-40.29 last week compared with a range of 33.68-38.91 the prior week. VIX spiked to an all-time high of 89 in October 2008. Since the market low of March 6, volatility has trended downward from the 50’s just prior to the start of the rally into the 40’s and 30’s. VIX ranged in the teens and twenties for most of 2008 prior to September and had never been higher than 46 prior to 2008. Recent readings indicate that investor fear is beginning to subside. 

Bonds up 0.8%
Bonds (as represented by symbol AGG) closed up 0.8% for the week and are up 4.5% from a year ago. AGG is an ETF that tracks the total United States investment grade bond market as defined by the Barclays Capital U.S. Aggregate Index of more than 9,000 government and corporate bonds. 

Crude oil up 2.4%
Crude oil futures prices were up 2.4% last week with the nearby contract closing at $51.55, up from $50.33 per barrel the prior week. Oil is off 64.9% from its July 2008 peak of $147 per barrel. Nationally, the retail price of gasoline averaged $2.06 per gallon for the week of April 20, up $0.01 from the prior week and down $1.45 per gallon from a year ago.

Gold up 5.1%
Spot Gold prices jumped 5.1% from the prior week, closing at $913.00 per ounce, up from $868.70 the prior week.

Economic Highlights
Unemployment claims continue rising 
The U.S. Department of Labor reported that seasonally adjusted initial claims rose to 640,000 for week ending April 18, an increase of 27,000 from the prior week’s revised figure of 613,000. The 4-week moving average fell by 4,200 to 646,750 while seasonally adjusted, insured unemployment rose to 6.137 million, an increase of 93,000 from the previous week’s revised level of 6.044 million.

March existing-home sales fall
The National Association of Realtors reported that existing-home sales fell 3.0% in March and declined 7.1% from March 2008 to a seasonally adjusted level of 4.57 million units. The national median home price declined to $175,000, down 12.4 percent from the prior year. A NAR survey showed that 53% of transactions are first time home buyers taking advantage of an $8,000 first time home buyer tax credit and low interest rates. There’s still 9.8 months of inventory on the market.

March new home sales fall
Sales of new single family homes fell 0.6% from February and 30.6% from a year ago according to the U.S. Census Bureau and the Department of Housing & Urban Development. The median sales price of new homes sold was $201,400 and the current unsold inventory of homes represents 10.7 months of supply at the current sales pace.

Durable goods orders fall
New orders for manufactured durable goods fell $1.3 billion or 0.8% in March according to a U.S. Census Bureau report. Seven of the past eight months have registered declines with February being the only exception with a 2.1% increase.

Consumer confidence rises
The weekly ABC News Consumer Confidence Index rose by 4 points to a reading of -47 in the week ending April 19. That’s up 7 points from the all time low of -54 on January 25. 

Fed’s Hoenig says government’s the problem - not the solution
In testimony before the Joint Congressional Committee, Kansas City Federal Reserve President Thomas Hoenig said the government is pouring billions of taxpayer dollars into insolvent firms that should be allowed to fail and is risking “prolonging the crisis and increasing its cost.” 

IMF expects $4.1 trillion in credit losses
The International Monetary Fund says by the end of 2010 credit losses could top $4.1 trillion globally, of which it attributes $2.7 trillion to the U.S. The IMF called on countries to stimulate their economies to stabilize their financial systems.

Sage Investment Strategies Portfolio Update
SIS portfolios stable year-to-date despite market volatility
Despite extraordinary market volatility and devastating losses for most stock market investors since October 2007, the Sage Investment Strategies portfolios have shown remarkable stability. Since our SISTM minimized stock market exposure for most of the past year, the performance of our portfolios (see chart above) has been relatively smooth compared to the stock market’s gut-wrenching volatility. The combination of low volatility and solid long term results enables our subscribers to sleep well at night. 

Our SISTM has performed an outstanding job of keeping our subscribers’ money safe from devastating losses compared with the two benchmarks against which we compare our performance: (1) a hypothetical investor’s portfolio consisting of 60% stocks and 40% bonds; and (2) the S&P 500 Index, representing the U.S. stock market. 

The performance of our portfolios ranges from -0.6% to +0.1% year-to-date (YTD) and from -3.2% to +3.8% year-over-year (YOY). In contrast, the performance of the 60/40 Benchmark is +0.8% YTD and -21.4% YOY while the S&P 500 Index has returned -0.8% YTD and -38.0% YOY. But YTD and YOY performance doesn’t tell the whole story. One must also examine the maximum drawdown (peak-to-trough losses) over the past year.  Maximum drawdown for the Sage Investment Strategies portfolios ranges between a manageable -4.6% to -6.1% compared to a massive -34.1% for the 60/40 Benchmark and an eye-popping -53.1% for the S&P 500 Index. 

Depending on which SIS portfolio strategy you follow, you enjoy an advantage over an average investor (the 60/40 benchmark) somewhere between 18.2-25.2 percentage points YOY. Compared with the stock market as represented by the S&P 500 Index, you have an even greater advantage of between 34.8-41.9 percentage points YOY.

The Sage Investment Strategies portfolios are designed to fluctuate very little compared to the stock market or a typical investor’s portfolio. For example, while the worst weekly return for the S&P 500 has been -18.2% over the past year, the worst weekly return for any SIS portfolio was just -2.0%. The same holds true for upside volatility in that the largest weekly gain for the S&P 500 has been 12.0% over the past year, while the largest weekly gain for any SIS portfolio was 3.4%. The benefit to SIS subscribers is that they achieve the same or better results than the stock market over the long haul while experiencing less portfolio fluctuation than most investors.

Comparing various measures of risk and return in the table above, the SIS portfolios continue to outperform most benchmarks over the past year. For those not familiar with all the terminology, let’s review what it means:

52-Week Return represents the percent gain or loss compared to one year ago.

Standard deviation (52-Wk Std Dev) measures the volatility of individual weekly returns from the average return. As standard deviation increases, so does risk. Conservative investors prefer portfolios with lower standard deviation values while more aggressive investors are willing to invest in portfolios with higher standard deviation if there is a good chance of achieving higher returns.

Maximum drawdown (52-Wk Max DD) represents the largest percent decline in the portfolio’s value over the last year from the highest peak to the lowest point following the peak.

Sharpe Ratio (52-Wk Sharpe) measures how well the return of a portfolio or benchmark compensates the investor for the amount of risk taken. Positive numbers are better than negative numbers and higher positive numbers signify better risk-adjusted returns.

It’s important to review all the above measures when assessing and selecting a particular investment strategy for yourself. Doing so may keep you from taking on more risk than necessary.

Here’s how each of the Sage Investment Strategies portfolios have performed:

Log in to read the rest of the newsletter and view the portfolio changes. Not subscribed yet? Try our 30-Day Free Trial.

Have a great week ahead!
Paul

Here is the Sage Investment Strategies weekly update on April 18, 2009:

Results through 4/17/2009

Market Highlights
S&P 500 Index now up 30.4% from March lows 
The S&P 500 Index (symbol: ^GSPC) chalked up another weekly gain, closing up 1.3% to 869.60. The Index is up 30.4% since its low of 666.79 on March 6, 2009. Representing the weighted value of 500 large publicly held U.S. companies and a bellwether for the U.S. economy, the recently surging index is still down 37.5% from a year ago and down 44.8% from its October 11, 2007 peak of 1,576.09. Since the market’s peak most investors have been on a tumultuous roller coaster ride punctuated by sharp zig-zag movements. Over the past 52 weeks alone the market has tumbled as much as 53.4% peak-to-trough on a weekly basis. While some market observers feel the bottom is behind us, others claim this is simply a bear market rally driven by speculators who had massively shorted stocks and are now unwinding their positions by buying back the stocks. Meb Faber points out that in the 1930’s bear market there were five stock market rallies of more than 20%, including a 48% rally after the initial cliff-dive. 

Market volatility continues to drop
The CBOE Volatility Index (symbol: ^VIX), a popular measure of anticipated stock market volatility, ranged between 33.68-38.91 last week compared with a range of 36.53-43.02 the prior week. VIX spiked to an all-time high of 89 in October 2008 but over the past 6 weeks the Index is trending lower during the market rally. VIX ranged mostly in the teens and twenties for most of 2008 prior to September and had never been higher than 46 prior to 2008. Current readings indicate that investor fear is beginning to subside. 

Bonds up 0.2%
Bonds (as represented by symbol AGG) closed up 0.2% for the week and are up 3.2% from a year ago. AGG is an ETF that tracks the total United States investment grade bond market as defined by the Barclays Capital U.S. Aggregate Index of more than 9,000 government and corporate bonds. 

Crude oil down
Crude oil futuresprices were off 3.7% last week with the nearby contract closing at $50.33, down from $52.24 per barrel the prior week. Oil is off 65.8% from its July 2008 peak of $147 per barrel. Nationally, the retail price of gasoline averaged $2.05 per gallon for the week of April 6, falling $0.01 from the prior week and down $1.34 per gallon from a year ago.

Gold off
Spot Gold prices declined 1.2% from the prior week, closing at $868.70 per ounce, down from $879.20 the prior week. 

Economic Highlights
Weekly unemployment claims still above 600,000 
The U.S. Department of Labor reported that seasonally adjusted initial claims fell to 610,000 for week ending April 11, a decrease of 53,000 from the prior week’s revised figure of 663,000. The drop is attributed to the shortened holiday week. The 4-week moving average fell by 8,500 to 651,050 while seasonally adjusted, insured unemployment broke through the 6 million mark to 6.022 million.

Retail sales still declining
The U.S. Census Bureau reported that advance estimates of March retail and food service sales posted a 1.1% drop from February and a 9.4% drop from a year ago. While retail sales are down 10.7% from a year ago, gasoline station sales are down 34.0% for the same period due to a substantial fall in both gasoline prices and demand.

Housing starts still falling
The U.S. Census Bureau reported that privately-owned housing starts in March fell 10.8% from February to a seasonally adjusted annual rate of 510,000. Housing starts are off 48.4% from a year ago. Building permits also fell, dropping 9.0% from last month and 45.0% from a year ago.

Consumer sentiment rises
A preliminary report from Reuters and University of Michigan showed consumer sentiment rising to 61.9 in April, up from a final reading of 57.3 in March. 

Fed’s Philadelphia Manufacturing Index rises
The Philadelphia Federal Reserve Bank’s manufacturing survey index rose to -24.4 from -35.0 in March, indicating that the pace of manufacturing slowdown is abating. The region’s manufacturing executives expect manufacturing to bottom in the coming six months.

Annual inflation declines
The Consumer Price Index fell 0.4% from a year ago, the first 12-month decline since August 1955. The index rose 0.2% from a month ago, fueled in part by an 11.0% rise in the index for tobacco products.

Sage Investment Strategies Portfolio Update
SIS portfolios stable year-to-date despite market volatility
Despite extraordinary market volatility and devastating losses for most stock market investors since October 2007, the Sage Investment Strategies portfolios have shown remarkable stability. Since our SISTM minimized stock market exposure for most of the past year, the performance of our portfolios (see chart above) has been relatively smooth compared to the stock market’s gut-wrenching volatility. The combination of low volatility and solid long term results enables our subscribers to sleep well at night. 

Our SISTM has performed an outstanding job of keeping our subscribers’ money safe from devastating losses compared with the two benchmarks against which we compare our performance: (1) a hypothetical investor’s portfolio consisting of 60% stocks and 40% bonds; and (2) the S&P 500 Index, representing the U.S. stock market. 

The performance of our portfolios ranges from -0.4% to flat (0.0%) year-to-date (YTD) and from -3.1% to +3.5% year-over-year (YOY). In contrast, the performance of the 60/40 Benchmark is +0.8% YTD and -21.3% YOY while the S&P 500 Index has returned -0.4% YTD and -37.5% YOY. But YTD and YOY performance doesn’t tell the whole story. One must also examine the maximum drawdown (peak-to-trough losses) over the past year.  Maximum drawdown for the Sage Investment Strategies portfolios ranges between a manageable -4.6% to -6.1% compared to a massive -34.1% for the 60/40 Benchmark and an eye-popping -53.4% for the S&P 500 Index. 

Depending on which SIS portfolio strategy you follow, you enjoy an advantage over an average investor (the 60/40 benchmark) somewhere between 18.1-24.7 percentage points YOY. Compared with the stock market as represented by the S&P 500 Index, you have an even greater advantage of between 34.3-40.9 percentage points YOY.

The Sage Investment Strategies portfolios are designed to fluctuate very little compared to the stock market or a typical investor’s portfolio. For example, while the worst weekly return for the S&P 500 has been -18.2% over the past year, the worst weekly return for any SIS portfolio was just -2.0%. The same holds true for upside volatility in that the largest weekly gain for the S&P 500 has been 12.0% over the past year, while the largest weekly gain for any SIS portfolio was 3.4%. The benefit to SIS subscribers is that they achieve the same or better results than the stock market over the long haul while experiencing less portfolio fluctuation than most investors.

Comparing various measures of risk and return in the table above, the SIS portfolios continue to outperform most benchmarks over the past year. For those not familiar with all the terminology, let’s review what it means:

52-Week Return represents the percent gain or loss compared to one year ago.

Standard deviation (52-Wk Std Dev) measures the volatility of individual weekly returns from the average return. As standard deviation increases, so does risk. Conservative investors prefer portfolios with lower standard deviation values while more aggressive investors are willing to invest in portfolios with higher standard deviation if there is a good chance of achieving higher returns.

Maximum drawdown (52-Wk Max DD) represents the largest percent decline in the portfolio’s value over the last year from the highest peak to the lowest point following the peak.

Sharpe Ratio (52-Wk Sharpe) measures how well the return of a portfolio or benchmark compensates the investor for the amount of risk taken. Positive numbers are better than negative numbers and higher positive numbers signify better risk-adjusted returns.

It’s important to review all the above measures when assessing and selecting a particular investment strategy for yourself. Doing so may keep you from taking on more risk than necessary.

Here’s how each of the Sage Investment Strategies portfolios have performed:

Log in to read the rest of the newsletter and view the portfolio changes. Not subscribed yet? Try our 30-Day Free Trial.

Have a great week ahead!
Paul

Here is the Sage Investment Strategies weekly update on April 11, 2009:

Results through 4/10/2009

Market Highlights
S&P 500 Index rallies 28.5% from March low 
The S&P 500 Index (symbol: ^GSPC) chalked up another weekly gain, closing up 1.7% to 842.50. The Index is up 28.5% since its low of 666.79 on March 6, 2009. Representing the weighted value of 500 large publicly held U.S. companies and a bellwether for the U.S. economy, the index is off 35.7% from a year ago and down 45.7% from its October 11, 2007 peak of 1,576.09. Since the peak most investors (except for our subscribers) have been on a tumultuous roller coaster ride punctuated by choppy up and down movements. Over the past 52 weeks alone the market has tumbled as much as 55.7% peak-to-trough on a weekly basis. While some market observers feel the bottom is behind us, others claim this is simply a bear market rally or what some call a “dead cat bounce.” From a historical perspective, in the 1930’s bear market there were five stock market rallies of more than 20%, including a 48% market rally after the initial cliff-dive (thanks, Meb Faber). The rally began to falter last week as companies began reporting their quarterly earnings but the index managed to end the week in positive territory.

Market volatility receding
The CBOE Volatility Index (symbol: ^VIX), a popular measure of anticipated stock market volatility, ranged between 36.53-43.02 last week compared with a range of 39.64-46.28 the prior week. While VIX continues to be high by historical standards and spiked to an all-time high of 89 in October 2008, the Index is starting to trend lower during the market’s recent rally. In comparison, VIX ranged mostly in the teens and twenties for most of 2008 prior to September and had never been higher than 46 prior to 2008. The current readings indicate that the high level of investor fear is beginning to subside. 

Bonds flat
Bonds (as represented by symbol AGG) closed flat for the week and are up 2.2% from a year ago. AGG is an ETF that tracks the total United States investment grade bond market as defined by the Barclays Capital U.S. Aggregate Index of more than 9,000 government and corporate bonds. 

Crude oil steady at $52
Crude oil futures prices were down slightly last week with the nearby contract closing at $52.24, down from $52.51 per barrel the prior week. Oil is off 64.5% from its July 2008 peak of $147 per barrel. Nationally, gasoline averaged $2.04 per gallon retail for the week of April 6, falling $0.01 from the prior week but down $1.30 per gallon from a year ago.

Gold off 1.6%
Spot Gold prices declined 1.6% from the prior week, closing at $879.20 per ounce, down from $893.80 the prior week. 

Economic Highlights
Weekly unemployment claims still above 600,000 
The U.S. Department of Labor reported that seasonally adjusted initial claims fell to 654,000 for week ending April 4, a decrease of 20,000 from the prior week’s revised figure of 674,000. The 4-week moving average was flat at 657,250 while seasonally adjusted, insured unemployment rose to 5.84 million.

Consumer credit falls
The Federal Reserve reported that consumer credit fell at an annual rate of 3.5% in February 2009. Revolving credit decreased at an annual rate of 9.75% while non-revolving credit increased by 0.25%. 

Wholesale trade mixed
The U.S. Census Bureau reported that February 2009 sales of merchant wholesalers were up 0.6% from the revised January figures but down 14.3% from a year ago. Sales of motor vehicles and parts were up 3.7% from January.

U.S. foreign trade deficit falls
The U.S. Census Bureau reported that in February the negative foreign trade balance of Goods and Services dropped 28.3% from January to -$26.0 billion. While exports rose 1.6%, imports fell 5.1%. The trade deficit was the lowest since November 1999.

U.S. “economic freefall” could end soon
The Director of the White House Economic Council, Larry Summers, told the National Economic Club of Washington, D.C. that economic conditions should improve in the coming months as credit conditions ease. However, Summers said that the U.S. may not be the world’s economic engine in the future. Separately, Minneapolis Fed President Gary Stern told the South Dakota Economic Summit that U.S. economic growth could resume by mid-2010 but added that the pace of the recovery will be “subdued” for some time.

Fed propping up the bond market
Recently released minutes of the Federal Open Market Committe (FOMC) meeting suggest that the Fed will continue purchasing hundreds of billions of dollars in U.S. Treasury Bonds to keep interest rates artificially low. Some analysts ponder how long the Fed’s actions will keep the Treasury Bond market from collapsing if big players like China, Japan and OPEC who hold 50% of the $3.1 trillion in U.S. debt begin dumping our bonds due to fears of inflation and/or the devaluation of the U.S. Dollar.  

Sage Investment Strategies Portfolio Update
SIS portfolios stable year-to-date despite market volatility
Despite extraordinary market volatility and devastating losses for most stock market investors since October 2007, the Sage Investment Strategies portfolios have shown remarkable stability. Since our SISTM minimized stock market exposure for most of the past year, the performance of our portfolios (see chart above) has been relatively smooth compared to the stock market’s gut-wrenching volatility. The combination of low volatility and solid long term results enables our subscribers to sleep well at night. 

Our SISTM has performed an outstanding job of keeping our subscribers’ money safe from devastating losses compared with the two benchmarks against which we compare our performance: (1) a hypothetical investor’s portfolio consisting of 60% stocks and 40% bonds; and (2) the S&P 500 Index, representing the U.S. stock market. 

The performance of our portfolios ranges from -0.3% to -0.1% year-to-date (YTD) and from -2.7% to +3.2% year-over-year (YOY). In contrast, the performance of the 60/40 Benchmark is -0.2% YTD and -20.3% YOY while the S&P 500 Index has returned -1.9% YTD and -35.7% YOY. But YTD and YOY performance doesn’t tell the whole story. One must also examine the maximum drawdown (peak-to-trough losses) over the past year.  Maximum drawdown for the Sage Investment Strategies portfolios ranges between a manageable -4.6% and -6.1% compared to a massive -34.9% for the 60/40 Benchmark and an eye-popping -55.7% for the S&P 500 Index. 

Depending on which SIS portfolio strategy you follow, you enjoy an advantage over an average investor (the 60/40 benchmark) somewhere between 17.6-23.5 percentage points YOY. Compared with the stock market as represented by the S&P 500 Index, you have an even greater advantage of between 33.0-38.9 percentage points YOY.

The Sage Investment Strategies portfolios are designed to fluctuate very little compared to the stock market or a typical investor’s portfolio. For example, while the worst weekly return for the S&P 500 has been -18.2% over the past year, the worst weekly return for any SIS portfolio was just -2.0%. The same holds true for gains in that the largest weekly gain for the S&P 500 has been 12.0% over the past year, while the largest weekly gain for any SIS portfolio was 3.4%. The benefit to SIS subscribers is that they achieve the same or better results than the stock market over the long haul while taking much less risk than most investors.

Comparing various measures of risk and return in the table above, the SIS portfolios continue to outperform the benchmarks over the past year. For those not familiar with all the terminology, let’s review what it means:

52-Week Return represents the percent gain or loss compared to one year ago.

Standard deviation (52-Wk Std Dev) measures the volatility of individual weekly returns from the average return. As standard deviation increases, so does risk. Conservative investors prefer portfolios with lower standard deviation values while more aggressive investors are willing to invest in portfolios with higher standard deviation if there is a good chance of achieving higher returns.

Maximum drawdown (52-Wk Max DD) represents the largest percent decline in the portfolio’s value over the last year from the highest peak to the lowest point following the peak.

Sharpe Ratio (52-Wk Sharpe) measures how well the return of a portfolio or benchmark compensates the investor for the amount of risk taken. Positive numbers are better than negative numbers and higher positive numbers signify better risk-adjusted returns.

It’s important to review all the above measures when assessing and selecting a particular investment strategy for yourself. Doing so may keep you from taking on more risk than necessary.

Here’s how each of the Sage Investment Strategies portfolios have fared over various time periods…

Log in to read the rest of the newsletter. Not subscribed yet? Try our 30-Day Free Trial.Have a great week ahead!

Paul