Bear market rally is unsustainable

The bear market rally that happened yesterday provided a short-lived jolt for investors.

Today, that exitement has been grounded back to normalcy. Camtrading.com still continues its lead against the market with a +2.5% YTD return on its portfolio.

 

The death of “Modern Portfolio Theory”

When it comes to investing, most people believe that the only way to achieve a decent return on their portfolio is through a highly diversified allocation of assets.

That idea has been dead for quite sometime now and anyone who tries to apply it to their clients are committing fraud.

 

Your 401(k)s are partying like it’s 1999, but like Douglas Adams says, “Don’t Panic!”

While the market has taken a ridiculously large loss in the month of October, Custodio Asset Management is announcing another record-beating performance against the S&P 500 benchmark. The S&P 500 has lost -27.1% of its value to a year-to-date low of -42.186%! Panic is rampant on Wall Street, and countless people have lost their 401(k). Others lost far more. With some careful maneuvering, CAM has staved off the worse of the effects and maintains its +11.188% YTD. Also at the end of this month, we have officially reached our strategy’s official 3-year mark this month! As testament to the effectiveness of this strategy, our clients have enjoyed stable growth this year over one percent a month. We hope that settles any uneasiness you had regarding the current market conditions.

On a much darker note, when you open your quarterly 401(k) statements, the numbers no longer matter. What we have noticed among the self-directed retirement plan participants is that many have mentally capitulated, abandoned hope, and have lost faith in the system. Sadly, that’s a position they were forced into. Who is really benefiting from self-directed retirement plans other than the institutions who charge the fees to provide worthless funds? Certainly, the fees you are paying is going towards expert advice who has a proven system for money management, right?

The business model for so-called expert advice on self-directed plans is flawed. You pay a fee to hear what you assume is the best course of action for your investments. As a result, you could lose everything. Who do you hold responsible? Not the expert. He’ll say, “that’s the way the game goes” and move on to his next client. You may wonder why he has other clients who still have their 401(k)s. You should. In the end, the adviser may make a few people very happy, and he will rake in ten times as many clients as he sacrificed. Needless to say, you don’t want to be on the bad side of an adviser’s gamble.

In fact, self-directed retirement accounts are probably one of the biggest scams of all time! It is like taking your car to a car shop, fixing it yourself, and then paying the mechanics for their advice on what you should do. Would you go to a dental office to do your own root canal while you wait for the dentist to call you and make a recommendation on how to fix your teeth? Then, pay them in full for the work you did on your own? There is absolutely no way you would tolerate such preposterous services. Yet, we allow self-directed retirement plan providers get away with it!

The self-directed retirement account system is inherently flawed, and the worst part is the majority of people in these plans don’t really have a choice! Most people would rather put it out of their minds and hope that things will take care of themselves by the time they retire. Many people continually rely on their employer contribution in the hopes that they accumulate enough for a comfortable retirement. With the current market environment, those preparing for retirement are re-thinking their options. They look toward the future with a grim outlook because their nest eggs have been rolled back to 1999 levels.

If you have a 403(b) or recently left your company with a 401(k) plan that has taken a large hit in this market chaos, call or e-mail us, we may be able to help. We’re not going to gamble with your money, and our numbers are proof positive that we create consistent growth even when the odds are stacked against everybody. It’s difficult to place your money in someone else’s hands when you’ve been betrayed before, but we are, quite literally, in this with you. Contact us, and we’ll tell you what CAM can do to protect and grow your retirement fund.

 

Market commentary, our returns and why you should care.

Today, August 21, 2008 was another one of those confusing days in the market.  The Dow, S&P 500 and Nasdaq opened much lower and it appeared, investors have lost a lot of interests.  Everyone seemed to be fixated on the media circus surrounding Freddie Mac and Fannie May.  The jagged trading pattern suggest short-term trades going in and out.  

Fortunately for the investors in our management, profits have been made this month that compelled us to maintain our cash positions.  For August, our investors have enjoyed a +4.386% return on their money.  The month prior, +10.292%.  

Even the market year-to-date can’t touch our August returns alone.  Why?  Look at the facts, S&P 500 -13.734%, Nasdaq-100 -8.454%, Dow -14.446%.  It’s no wonder, money is flowing out of traditional buy-and-hope institutions to pursue proactive managers like Custodio Asset Management.  And for good reason, in 2007 we have returned a hefty +50.806% to our investors net of fees!  

If your investments are sagging, ask your managers what they are doing to protect your money?  If they tell you, everyone is experiencing the same pain, ask them how they are able to know everything.  It’s obvious that your manager is looking to grow THEIR assets under management, but what are they doing to grow YOUR assets?  Where were they PRIOR to this economic downturn? 

If your manager is lost for words, it is more than likely that they don’t really have a plan to protect your assets from serious decline.  How do I know?  Take a look at your portfolio, why is your money split up in so many different funds?  Since when was it okay to “diversify” so that you can LOSE less than everyone else?  It’s all sales tactics.  They got you in the door because they had a glossy presentation.  Maybe they were a friend or an associate from some previous affiliation.  Maybe they’re even a family member and you, being a kind and generous person, decided to help them out.  

Whatever the reason, the bottom line is, we have a hedge fund strategy, without the barrier to entry.  We can make money whether the market is up or down.  Our mission is to protect your assets from the vultures at Merrill Lynch, Smith Barney, and the like.  Their mission, to bring in assets under management. If the market is down, the salesmen (and women) from these firms will be beating on your door looking for your deposit.  Why?  Because their personal income is suffering.  They don’t care about you, they care about themselves, ask anyone in this camp and if they give you an honest answer, they will tell you this!

So, if your money is not OUT of these firms yet, it’s never too late!  Unless, it has been seriously devalued…then I wish you more healthy years of earned income to recover.