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AlphaProfit Newsletter: Repositioning Schedule and December Indicator Update
December 1, 2008
Dear Valued Subscriber,
The Core and Focus model portfolios will be repositioned for the evolving market environment after the markets close on Wednesday, December 31. To help you closely track the model portfolios, we will publish the Repositioning Alert by 12:00 p.m. Central Time on December 31 in the Subscriber Login area. We will notify you via e-mail when the Repositioning Alert is published on the web site.
Prior to repositioning the model portfolios, we are not making any changes to the sector and industry recommendations or the model portfolios. The current model portfolio
compositions as well as exchange-traded fund (ETF) and mutual fund recommendations are available in the Subscriber Login area of the web site.
Market Developments
A barrage of weak economic data, massive cuts in analysts' corporate earnings forecasts, and fears of Citigroup going under caused equity prices to tank after a short pre-election rally. Even announcement of China's $586 billion stimulus package failed to revive investor sentiment. On November 21, the widely followed S&P 500 index traded at levels not seen in the last 11 years.
Optimism that the Federal Reserve's $800 billion commitment to resuscitate lending and decisions made by President-elect Obama’s economic team will put the U. S. economy back on a firmer footing enabled equity prices to stage a remarkable 5-day rally during the last week of November. The government’s action to rescue Citigroup also relieved investors. The S&P 500 surged more than 21% from its low to record its best weekly gain since 1974.
Downgrading the AlphaProfit Sector Portfolio Indicator to 'Wait'
In the near-term, equity prices are likely to be influenced by two conflicting factors: Investors' drive to seek bargains and tax loss-related
selling. Reflecting most of the near-term negatives, U. S. equities are attractively valued particularly vis-à-vis Treasury bonds. The dividend
yield on the S&P 500 is about 3.4% compared to the 2.9% yield on the 10-year Treasury bond. Offsetting this attraction to put new money to work, investors will seek to
sell losers and recognize losses for tax purposes before year-end.
Given the sharp run-up in equity prices in the week past, a pullback could be in the offing. That said, we do not expect the November lows to
be breached in December. Equity prices are likely to add to their recent gains at a slow pace through the month as fear subsides and investor confidence improves.
We downgrade the AlphaProfit Sector Portfolio Indicator
to 'Wait' before repositioning the model portfolios. Subscribers with positions in
the current investment recommendations can maintain their holdings. Aggressive investors can consider modestly increasing their overall
exposure to equities. New subscribers can defer committing capital until the model portfolios are repositioned. We encourage subscribers to
maintain adequate cash reserves and have appropriate diversification in their overall portfolio.
Model Portfolio Performance
Model portfolio returns as of November 30, 2008 are as follows:
| Nov. 2008 | YTD* | 1 Year | 3 Year | 5 Year | Sep. 2003 Inception | |
| AlphaProfit Focus™ Model Portfolio | -10.4% | -42.7% | -43.7% | -11.0% | 2.9% | 5.0% |
| AlphaProfit Core™ Model Portfolio | -10.1% | -42.4% | -42.6% | -9.5% | 0.0% | 1.7% |
| DJ Wilshire 5000 Total Market Index | -8.2% | -38.5% | -38.8% | -9.0% | -1.2% | 0.3% |
* YTD refers to the December 31, 2007 to November 30, 2008 period.
Stock recommendations will be included in the December Report due for publication on the 12th.
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.