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INM May '08 - Assets Under Management Rising Here
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


Some of the materials you may have recently seen circulating have made mention of the fact that assets under management by our team in Lighthouse Point, Florida have been on the rise.  However, a couple of existing clients, upon seeing such references, inquired as to why their individual accounts had not “increased considerably”, as if their accounts were being overlooked and they were not participating in profitable trades that our other clients were successfully nailing down. So, for the record, I wish to clarify the picture.  It is true that assets under management have risen considerably in the first past of this year.  Why?  Mostly because a number of new clients have chosen to open accounts with Source Capital Group, transferring in from other broker/dealers, inspired by the prospect of getting above average returns.  There are no guarantees, but the approach we use stacks the odds in favor of us eventually reaching that goal of above average returns for our clients.

Especially during this most difficult year, fund inflows are something to be proud of in my opinion.  During the recent credit crisis, in fact, many financial firms have seen considerable fund outflows.  Hedge fund and mutual fund managers have, in many cases, dealt with heavy withdrawals and redemptions as investors have scrambled in fear.  We know that much of the crisis had to do with mortgage related investments, and investment firms with exposure to collateralized debt obligations (CDOs) came under fire.  Bear Stearns Cos. Inc (BSC) made headlines when it had to be bailed out by JP Morgan Chase & Co (JPM) with help from the Fed.  Such challenging times prompt everyone to reevaluate their approach and consider making adjustments to best position one’s self to minimize the damage.  Now, rather than working on recovering what was lost, investors who did a good job of preserving capital are ready to make some progress.  Investment managers who failed to do a diligent job of protecting their clients' capital should not be surprised to see those accounts moving away to other firms.

 

High expectations are good.  You are normal to want and expect profits.  Holding our ground, earning safe interest on cash in money market funds, and incurring some small losses on limited trades this year, has not been very thrilling or rewarding.  It may be a helpful reminder for some investors, though, for us to point out that your results are meeting the definition of “above average” right now if your portfolio is not -5.6% this year (the amount the S&P 500 Index is down YTD at time of writing). 

 

Several of the new clients and prospective clients we have heard from, however, were clearly frustrated this year to be falling in the “below average” category.  But the fact is, periods of underperformance are not unavoidable.  Losses must be well-managed and kept in a healthy perspective. Those who cannot tolerate volatility should not invest in stocks.  However, there is good news for those who can accept the risks, and who have patience and persistence, for periods of out-performance are also inevitable.

 

In a recent Bloomberg television interview we saw Greg Morris, who manages money based upon technical models, and was put in the spotlight for the fact that he had outperformed 97% of the fund managers in his category through the first part of 2008. In a matter of fact manner, he pointed out that he had achieved his standout performance by simply sitting it out and earning safe interest on cash in money market funds, unlike other fund managers who were invested during the market's correction.

 

I saw Ben Stein, who has a new book out on investing, recently being interviewed on television by Pat Robertson. Stein said he was shooting for 10% growth per year.  When the reverend said that he was shooting to get 20% per year, Stein said that 20% growth in a year was a totally unrealistic return for him to be able to achieve. I personally don't think that either one of them is aiming high enough.  With this system, I know we can have years where we see our clients' portfolios realize better than 100% growth.  The problem, however, is consistency.  We simply cannot achieve that kind of growth each year like clockwork.  Therefore, it is most important that we do the right things that have proven to help investors generate huge gains from time to time, and when things are not working for stocks, we limit the damage.  Or sometimes, when stocks are not in a favorable trend, we are best off positioning ourselves just as Mr. Morris did earlier this year.

 

The technical models we follow have flashed more buy signals in recent weeks, and I am confident that other market technicians, like Morris, are aware of the market's improved health and getting more heavily invested in stocks again. Maybe you are evaluating your options, with a mind toward getting proactive about your portfolio.  Contact our office and speak with us about your goals and how we can do our best to help you to meet them, especially if you believe you see eye to eye with us and have confidence in the system.

About Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net :
Kenneth J. Gruneisen has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen became a Registered Representative in 1987 and his career includes experience offering personalized assistance to investors with more than a decade of experience as a Registered Principal managing a branch office.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.


Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.

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The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

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