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AlphaProfit Newsletter: August Indicator Update
August 1, 2008
Dear Valued Subscriber,
The AlphaProfit model portfolio returns as of July 31, 2008 are as follows:
| Jul. 2008 | YTD* | 1 Year | 3 Year | 4 Year | Sep. 2003 Inception | |
| AlphaProfit Focus™ Model Portfolio | -8.8% | -10.9% | -11.2% | 19.4% | 64.8% | 100.4% |
| AlphaProfit Core™ Model Portfolio | -4.0% | -11.2% | -7.4% | 20.8% | 52.3% | 68.2% |
| DJ Wilshire 5000 Total Market Index | -0.8% | -11.7% | -10.2% | 10.4% | 29.6% | 45.6% |
* YTD refers to the December 31, 2007 to July 31, 2008 period.
The dominance of commodity-related stocks as the leadership group in the stock market was undermined in July. Concerns of declining global petroleum product demand weighed on energy shares. Energy stocks on average declined nearly 16% as oil slid nearly $16 a barrel.
Along with healthcare, financials tried to establish themselves as the new favorites. The U. S. Securities and Exchange Commission's emergency ruling
prompted rotation from energy to financials to a large degree. On July 15, the SEC limited certain types of short sales in shares of 19 financial companies including Fannie Mae and Freddie Mac. In response, hedge funds likely covered short positions in the financial sector using capital received from sale of energy winners.
Shares in the financial sector rocketed to gain 37% in just six trading sessions. Negative news flow including reports of falling home prices, bank
failures, dividend reductions at regional banks, and poor earnings reports from financial institutions soon stemmed the advance. Shares in the financial sector finished up nearly 7% on average.
These sector level gyrations were for the most part neutralized in broad indexes. The Dow Jones Wilshire 5000 ended July with a modest loss of 0.8%.
Maintaining the AlphaProfit Sector Portfolio Indicator at 'Buy'.
The underperformance of the AlphaProfit model portfolios in July was largely caused by the decline in share prices in the oil & gas exploration
and production group. With oil & gas share prices materially lower than a month ago, we believe such stocks trade at pessimistic expectations versus
their earnings potential based on the current oil and gas price strip. As such, oil & gas shares can recover some of their
recent losses in the period ahead. We rate the AlphaProfit Sector Portfolio Indicator 'Buy'
based on this expectation.
As for the overall market, a sustained recovery is likely to materialize when the Federal Reserve takes on a more accommodative approach to monetary policy and clarity on year-over-year corporate earnings growth improves. We prefer to err on the side of caution and encourage subscribers to maintain adequate cash reserves and have appropriate
diversification in their overall portfolio.
We welcome your comments.
Best regards,
Sam Subramanian
AlphaProfit Investments, LLC
Ideas. Insights. Results.
http://www.alphaprofit.com
Notes: The AlphaProfit Sector Investors' Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual advice on investing. Before buying or selling any mutual fund, exchange-traded fund, security, or investment, read the prospectus carefully. For securities held in brokerage accounts, read the broker's specific terms and conditions which apply to trading of the securities. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from any of the mutual fund companies, brokers or entities connected with the exchange-traded funds mentioned in the newsletter. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.
Copyright © 2008. AlphaProfit Investments, LLC. All rights reserved.