Coming off a tough second quarter of 2008 and the worst June for the stock market in almost 80 years, I wanted to pass along some good news regarding the performance of our Low Risk, Low Volatility portfolio.
As you know, it is our strong belief that limiting losses and generating monthly income are more important contributors to portfolio growth over time than capital gains. In particular, limiting losses allows us to take advantage of the next bull market in stocks from a much higher account value than would be possible in a “traditional” portfolio approach. During the first six months of 2008 and, in particular, the month of June, our strategy was verified and rewarded.
Although the S&P 500 had it’s worst June since the Great Depression and even Warren Buffett suffered his worst six months of investment performance in almost 20 years, our Low Risk, Low Volatility Portfolio was up 1.1 percent for the month and has posted a 6.8 percent profit for the year so far.
What makes our strategy unique among those offered by most other advisors, is our ability to profit on our downside insurance (put options) during bear markets while collecting income month after month through the conservative strategy of selling covered call options. In fact, since we began offering the Low Risk, Low Volatility Strategy to our clients last year, our stock positions have hardly moved from where they were last summer. The 16.3 percent profit we have posted over the past year has been realized from downside insurance and income-generating strategies.
Looking forward into the second half of 2008, we will of course continue to tightly manage downside risk. We believe that, while the market will continue to be impacted by inflationary concerns and developments in the presidential and congressional elections, the primary influence on market direction will be oil and gasoline prices. We believe that one of the only catalysts that could drive any sort of a meaningful market rally before the end of the year would be a welcome decline in oil and gasoline prices.
For our latest performance statistics, go to www.npfa.typepad.com/news/performance.html
To request information about opening an account, go to www.northpointfinancialadvisors.com/contact.php
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