As of mid-March, common stocks, as measured by the S&P 500, had reached a five-year high. Pundits love to seize upon this type of “factoid.” It has provided fodder for facile prognosticators, both Bull (Good times are back!) and Bear (The market has gone nowhere in five years!). What is an investor to do when he is constantly bombarded with such confident yet conflicting claims?
Our answer is embodied in the chart below. It depicts the growth of $100 dollars invested in the RLI 1 fund, an actual portfolio that we manage. The fund follows a simple strategy using the eight asset classes we recommend for our readers. We provide a detailed discussion of this account in the enclosed article “Structured Asset Management: Walking the Walk, Part 1.”
Six years is far too short a time frame to draw meaningful conclusions, but so far we are encouraged that our approach has served our clients and readers well. The Lipper Income Fund Index represents the performance of the median actively managed, income-oriented mutual fund in Lipper’s universe, when ranked by monthly performance. As far as we are concerned, the benefits of a passive asset class approach are plain to see.
The RLI fund is constrained by a mandate to produce investment income, but as we explain in the following article, it is comprised of the same asset class “building blocks” we recommend for our readers and subscribers. We are confident that if an investor had developed a portfolio allocated appropriately for his circumstances using our recommended asset classes, he would have made excellent progress toward meeting his long-term objectives over this time frame. One need only apply those virtues that are equally indispensable elsewhere in life: patience, discipline, and frugality.
Also in This Issue:
Structured Asset Management: Walking the Walk, Part 1
Pooled Income Funds and CRUTs
Social Security: The Debate Goes On
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Asset Class Investment Vehicles
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