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    October 2016
    M T W T F S S
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    Steve Selengut

    Steven R. Selengut, MBA, has been in the financial services industry for more than forty years. He began investing while employed in a life insurer's pension investment department. He began his trading career using the working capital model as outlined in his book, The Brainwashing of the American Investor.

    Steve Selengut's Recent Articles

    Index and Sector ETFs: Mutual Funds: Speculation X3

    How many of you remember the immortal words of P. T. Barnum? On Wall Street, the incubation period for new product scams may be measured in years instead of minutes, but the end result is always a greed-driven rush to financial disaster. The meltdown spawned index mutual funds, and their dismal failure gave life […]


    Brave Old World: Market Cycle Investment Management

    The Market Cycle Investment Management (MCIM) methodology is the sum of all the strategies, procedures, controls, and guidelines explained and illustrated in the “The Brainwashing of the American Investor” — the Greatest Investment Story Never Told. Most investors, and many investment professionals, choose their securities, run their portfolios, and base their decisions on the emotional […]


    Strategic Investment Mixology – Creating The Holy Grail Cocktail

    So what do your Investment Manager and your neighborhood bartender have in common, other than the probability that you spend more time with the latter during market corrections? Antoine Tedesco, in his “The History of Cocktails“, lists three things that mixologists consider important to understand when making a cocktail: 1) the base spirit, which gives […]


    Stock Market Corrections Are Beautiful… When

    A correction is a beautiful thing, simply the flip side of a rally, big or small. Theoretically, even technically I’m told, corrections adjust equity prices to their actual value or “support levels”. In reality, it’s much easier than that. Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, […]


    A Preemptive, Timeless, Portfolio Protection Strategy

    A participant in the morning Market Cycle Investment Management (MCIM) workshop observed: I’ve noticed that my account balances are near all time high levels. People are talking down the economy and the dollar. Is there any preemptive action I need to take? An afternoon workshop attendee spoke of a similar predicament, but cautioned that a […]


    One Person’s Bond Crash is Another’s Income Opportunity

    Today’s “Investment News” headline (from Bloomberg) is designed to make you shiver in your income portfolio boots: “Big fixed income shop prepares for the worst”… The Bond Portfolio “Window Dressing” sell-off has begun. Bond funds in general are now holding 8% of assets in cash, the article reports…highest since the financial crisis, and 1999, even. […]


    Income Investing: “Feed Your Head… Feed Your Head”

    Jefferson Airplane has never, ever, been mistaken for a band of financial advisors, but the White Rabbit lyrics can be incredibly instructional to the generation of investors who experienced the classic first hand — as a description of their own college days’ lifestyle. If only they had heeded the dormouse’s call to “feed your head.” […]


    Income Closed End Funds and Total Return Analysis

    What are the two main reasons mere mortals invest in income purpose securities: one is their inherent safety compared to equities… a 50% income asset allocation is much safer and theoretically less volatile than a 100% equity exposure. There is less risk of total loss in XYZ company bonds or preferred stock than there is […]


    Income CEF Price Volatility… No Problem at All

    Market Cycle Investment Management portfolios are different from any others you may be analyzing, and all investors analyze their portfolios most intently when their “bottom line” market values begin to crumble. This focus on market value is part of Wall Street’s Brainwashing of the American Investor. MCIM investing is more realistic. It recognizes that investment […]


    Is Your Investment Portfolio Prepared For Higher Interest Rates?

    I’ve heard a lot of discussion lately pressing the idea that rising interest rates are something to be feared, and prepared for by: accepting the lower rates now, buying the shortest duration positions, or even liquidating the income portfolio entirely. A rising interest rate environment is super good news for investors… up to a point. […]


    The Investment Gods Are Furious

    Market Cycle Investment Management (MCIM) is an historically new methodology, but with roots deeply embedded in both the building blocks of capitalism, and financial psychology— if there is such a thing. The earliest forms of capitalism sprung from ancient mercantilism, which involved the production of goods and their distribution to people or countries mostly around […]


    The “Total Return” Shell Game

    No “Interest Rate Sensitive” Security is an Island… Just what is this “total return” thing that income portfolio managers like to talk about, and that Wall Street uses as the performance hoop that all investment managers have to jump through? Why is it mostly just smoke and mirrors? Here’s the formula: Total Income + (or […]


    Wall Street’s Even Dirtier Little Secret

    As of Close of Business May 8th, no less than 57 multi-year experienced, Taxable Income, Closed End Funds (CEFs) were paying 7% or more in 401k and IRA eligible income to their shareholders. 31 issues (54%) paid 8% or above, and the average for the Heinz-like group was 8.56%. All of these portfolios are professionally […]


    Wall Street’s Dirtiest Little Secret

    As of Close of Business May 8th, no less than 53 multi-year experienced, Tax Free Income, Closed End Funds (CEFs) were paying 6% or more in federally tax free income to their shareholders. 18 issues (34%) paid 6.4% or above, and the average for the group was 6.35%. All portfolios are professionally managed by this […]


    How To Be Prepared for Rising Interest Rates

    I’ve seen a lot of discussions lately that erroneously conclude: “rising interest rates are something to be feared and prepared for” by buying short duration bonds or by liquidating income purpose securities entirely. Have they all gone mad! A rising interest rate environment is super good news for investors… up to a point. When we […]


    I Want Tax free Income

    The LinkedIn discussion considered ROTH vehicles invested in equities and “cash value” Life Insurance as two ways to obtain Tax Free Income… something was missing. Why not buy tax free muni bonds in the form of Closed End Funds (CEFs)…. more than 6% tax free, in monthly increments, plus the opportunity to take profits (taxable, […]


    Please Mr. Obama, Lend Us Your Crystal Ball

    The President wants the DOL to fine professionals who make money allowing 401k participants to make “bad” investments. —————————————————- So what’s the difference between a “bad” and “good” investment? Right, well in the Will Rogersian world of politicians and regulators, “the good ones only go up in price; the bad ones go down”. “Don’t gamble; […]


    To Rollover 401k Plan Assets or Not To… That Is The Question

    The major purveyors of 401k products, and those who benefit from using them remind me of politicians… they press the party line, and use their power to demonize the competition. Their position and deep pockets allow them to get their message out while we who have neither can only shake our heads and whimper about […]


    Dodging the DOL Chainsaw: Small Business Owner Protection

    The DOL is Coming!   The DOL is Coming! As if you weren’t already up to your elbows in rules, regulations, and expenses, the Department of Labor has empowered itself to fine at least half of the Employer/Plan Sponsors it audits… for multiple investment related reasons. These include, among other things, the cost of the […]


    The “Retirement Ready” 401k… exists. Right?

    Income Production = Market Value Growth + Retirement Security Unfortunately, it just isn’t available to you in the standard 401k product menu. Since the demise of corporate Defined Benefit Plans, most employees have been forced to rely on their own investment acumen to make sense of the product menu choices accompanying an ever growing array […]


    Retirement Income Investing: The Dreaded RMD

    All of us are approaching retirement, many of us are already there, and some of us (myself included) are thinking about the ultimate IRS slap-in-the-face… The Required Minimum Distribution. It’s time to make sure that your retirement income program is actually ready. Every investment program becomes a retirement income program eventually. First off, you need […]


    Year End Review 2014 and 2015 Preview

    Let’s Talk About the Market Numbers… Note that this report pertains most directly to portfolios operated under the guidelines, rules, and disciplines of Market Cycle Investment Management (MCIM). MCIM produces disciplined “High Quality Growth & Income Portfolios”, designed to maintain and/or to grow income regardless of the direction taken by markets or interest rates. ———————————————————- […]


    The Microsoft Retirement Income Program

    Reading Between the Lines Once we recognize that all investment portfolios eventually become retirement income portfolios, we can begin to focus on the regular recurring income that they produce… retired or not, the market value of your private portfolio (or of your 401k plan) has no purchasing power. Yet all 401k programs are performance evaluated […]


    The S&P 500: 15 Years to Nowhere!

    On November 30 1999, the S & P 500 Index was around 1,400, basking in the sunlight of what many analysts were calling the “No Value At All” or “Dot Com” Bubble. Roughly ten years later, December 31 2009, the Index was about 20% lower (@ 1,120) a mere ten months off a second major […]


    S&P 500 Index: Morning After 401k Musings

    March 2000 witnessed the S&P 500 Index breach the 1,500 barrier for the very first time… seven and a half years later, it was in just about the same position. Inter-day October 15th, after an incredible bounce from its 56% drop through March 6th 2009, the S&P was just 20% above where it had been […]


    Dealing With Stock Market Corrections: Ten Do’s and Don’ts

    A correction is a beautiful thing, simply the flip side of a rally, big or small. Theoretically, corrections adjust equity prices to their actual value or “support levels”.  In reality, it may be easier than that. Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, and investor profit […]


    Pitfalls of Target Date Funds… and some proposed replacements

    The LinkedIn Group Communities are abuzz with the idea that, even as popular as they have become, Target Date Funds (TDFs) are just not wonderful after all… Several fixes have been proposed. I’ve done so myself. as you know. This one is from “A Better Option than Target Date Funds” and needs some cautionary […]


    Inside Modern Portfolio Theory – For Emperors Only

    Maybe it’s just me, but when I hear “Monte Carlo”, I can’t help but think “casino”… My previous article post dealing with the income growing opportunities of 401k account “drawdown” elicited some interesting commentary from the MPT community. Apparently, if we apply the proper mathematical algorithms to all stock market probabilities, including all possible cash […]


    401k Drawdown… OMG

    “Drawdown” has become the most feared word in the 401k vocabulary, just as “Total Return” has become the most worshipped phrase. OMG, how will plan participants be able to retire if their portfolio market values stop rising! “Well, yeah,” you might say, “isn’t that what investing is all about. If you’re in the right sectors […]


    DATELINE: New York Stock Exchange, Valentine’s Day, 2015

    Alternative A: Valentine’s Day Massacre Highlights Frenzied Five Month Downturn! Alternative B: Valentine’s Day Champagne Toasts Spectacular Six Year Rally! No matter which of these scenarios plays out, your primary concern should be preparedness… a case could certainly be made for either. Market Cycle Investment Management (MCIM) investors have little reason to worry. Equity Portfolios […]


    Retirement Preparation 101

    Prompted by a recent article in “Financial Planning” entitled “For Retirement Portfolios, a Smarter Glidepath”… several points in the referenced “conventional wisdom” have fingernails on chalkboard quality. The use of “stocks” in retirement to help with portfolio growth and to keep up with inflation is the first. The main thrust of a retirement program is […]


    Total Return: Smoke and Mirrors?

    Just what is this “total return” hoop that investment managers are required to jump through? Why is it mostly just smoke and mirrors? Here’s the formula: Total Income + (or -) Change in Market Value – Expenses = Total Return — the ultimate test for any investment portfolio. Applied to income purpose portfolios, it is really […]


    The Retirement Income Gap

    A BlackRock and EBRI analysis (from Think Advisor, July 9th) suggests that older retirees are further from being retirement ready than their younger counterparts… go figure. Ironically, since most benefit plan investors (really speculators) at all ages are market value focused instead of income focused, this observation will likely be the same ten years from […]


    Target Date Funds = Market Timing Roulette Wheels?

    Ross Kerber’s Reuters “feed” entitled: “Target date funds try timing the market” is really a must read article… what it says in a nutshell is that market value growth considerations are wagging the retirement income dog yet again. Once the gambling begins (i.e. MPT “tactical” tinkering), the retirement program ends. Here’s the link: Yes, […]


    401k Plan Fiduciary and Performance Responsibility

    Anyone who influences the investment product mix should likely be a fiduciary… but only if the selected investment managers are fiduciaries as well. Yes, that eliminates all Mutual Funds and ETFs, since neither admit fiduciary responsibility. But Mutual Funds, ETFs, and Collective Trusts could be recommended by plan fiduciaries who are not paid for product […]


    The Investment Gods Created Volatility… and it was good

    Have you noticed how paranoid people are getting about market “volatility”. OMG, cries the DOL, we’re going to fine employers if their 401k plan participants don’t grow their balances as fast as the average plan around the country… thus making the Federal Government a participant in roughly half the 401k plans in every audit time […]


    Your (401k) Investment Portfolio: What’s Next

    Seven years or so ago, the broad market tracking S & P 500 Index inched past the much higher quality, dividend paying NYSE equity only, Investment Grade Value Stock Index (IGVSI) for the first time in the 21st century. Income Closed End Funds began their Financial Crisis enhanced decline a few months earlier. Four years […]


    The Extremely Good News About Higher Interest Rates

    What! Yes, market values of existing income purpose securities will certainly move lower… BUT, the income you’ve contracted for will likely remain the same, AND, you will be able to invest in new paper at higher yields. This is a good thing, and you should not be so easily convinced that it is not. Even […]


    The Very Best 401k Plans

    I just read an article that listed six features of “great” 401k plans: high company contributions, instant eligibility, immediate vesting, low fees, auto enrollment, high employee contribution rates. I agree, but something is missing. What about the investments… a black hole of understanding, in spite of all the information available on the internet. Neither participants […]


    Retirement Readiness

    One of the good things about being the “old guy in the corner office” is the opportunity to share your experience with others. As a private portfolio manager, bringing people from active careers into nearly as active retirements has always been a major objective. Many of us are not retired because we don’t choose to […]

    Posted: June 3rd, 2014 under Financial Planning, General, MONEY®.


    Three Major Meltdowns… Next?

    The market was breezing along that year, enjoying one of the broadest rallies ever experienced. From the very start, equity prices seemed incapable of moving lower; only interest rate sensitive investments had that ability. One major barrier yielded to the next; new all time highs became a weekly occurrence at first, a daily expectation later. […]

    Posted: May 27th, 2014 under Financial Planning, MONEY®.


    The American Dollar – YOU ARE HERE

    Written by Steve Selengut   A rally is a beautiful thing, particularly when the correction preceding it was embraced enthusiastically. This is the time to harvest your profits – pipe dreams of great wealth and inflated ego aside, jump on those profits before they erode before your disbelieving eyes. If you over think the environment […]

    Posted: May 20th, 2014 under General.


    Stable Value Funds vs. Money Market Funds in 401k Plans

    An interesting debate; so let’s deal with it from an investment manager’s perspective. I recently compared the two with respect to three MCIM (Market Cycle Investment Management) collective funds. These are individual security content funds, containing mostly Investment Grade Value Stock Index (IGVSI) companies and a broad variety of Income CEFs. Would currently higher yielding […]

    Posted: May 17th, 2014 under Finance, Investments, MONEY®, Mutual Funds.


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