No investor should ever be surprised by the changes in market value that appear on his or her monthly account statements. In general, media noise throughout the month should lead to a feel for what has been going on and investors should  understand that the prices of investment securities, particularly equities, are constantly changing. 

What happens in the future is unpredictable, but understanding the past and how it impacts your unique portfolio, is essential to your long-run investment comfort --- and sanity. The IGVS Expectation Analyzer has been developed for investors who want to open their monthly statement envelop (or view it on line) with a reasonable idea of what's inside.

Unfortunately, none of the mainstream investment information provided by Wall Street is geared solely to IGVS investors and little is done to help investors in general deal with portfolios that are properly asset allocated and properly diversified. 

The IGVS Expectation Analyzer applies mostly to the equity bucket of your investment portfolio, and to Market Cycle Investment Management Portfolios --- i. e., those that are designed and managed using The Working Capital Model. There's a lot more to the stock market than the DJIA or the S & P 500, as evidenced by historical NYSE breadth figures from 1999 through August of 2007, when it was determined that an Investment Grade Value Stock Index was necessary.

ONE: The Investment Grade Value Stock Index stopped rising in June of 2007, after a full year to the upside --- then, after a nearly two year slide, it rebounded approximately 37%  in 2009. The major Wall Street worshipped averages rose  roughly 21%. After achieving a near All Time High on May 2nd (up 14% in 2010), the IGVSI has backed off sharply in a much needed correction. It is hard to believe that the market didn't respond to the incredible amount of bad news sooner than it did. 

Although the carnage continued through June, sharp drops are friendlier long-term than the slow attrition variety. Eventually (hopefully this November) the bad news will be replaced by good, non-inflationary, capitalism-friendly announcements. IGVSI should be prepared to react "WCMly" to any knee-jerk reactions in either direction. The IGVSI moved lower again in June, BUT both income security indices moved higher. Equity-heavy statements will be lower in June, but income account statements will be slightly positive.  

It should be clear that all forms of disbursements are detrimental to long-term portfolio health. Try to replace all disbursements made for pre-paid commissions, gifts, vacations, etc. --- you can only spend it once!

THREE: IGVS Issue Breadth Statistics  continued to be negative, with another serious gap to the down side. Cumulative breadth numbers remain positive, but May-June figures were decidedly negative. A negative for all portfolios containing equities. 

FOUR: IGVS New 52-Week High vs. New 52-Week Low Statistics turned totally negative in June. This is negative for statement market values, and accounts for the slower growth in Working Capital in Equity dominant portfolios 

Negatives: All equity numbers were negative, as predicted (sort of) in April when I said "but enough minor "buts" to raise an eyebrow".  Income securities rose in price, softening the impact of lower equity prices. Most MCIM portfolios will sport lower market values in June. .

Positives:  No positive statistics for the first time in about 15 months. Working Capital continued to grow and  base income production has remained strong (neither are directly impacted by changes in market value). Income securities rose, dividends were maintained, and corrections (in the long run) are good for the equity markets.

"Working Capital" should be up since year-end,  and "Smart Cash" levels should be falling.  Tell me why for a free book? (limit of five)

Monthly Statement Prognosis: Most portfolio market values will be down from May levels, and that is a good thing! It's a good thing because markets cannot safely go up without occasional profit taking. Working Capital numbers will continue to rise, and income will continue to grow, throughout the correction, regardless of how long it lasts.

All income portfolios should be up slightly in market value.

There is absolutely no reason to think that economic conditions will not improve over the long run, and still every reason to add to portfolios to increase your Working Capital.  In fact, buying now while prices are lower, is the essence of Market Cycle Investment Management.

If the correction continues,  add to your portfolios --- no amount is too small. 

Corrections are always the opportunity to sow the seeds of future profits --- and to increase portfolio cash flow. ALWAYS.

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