Strategy Update Q3 2007

10/3/07

The third quarter was characterized by a fair amount of volatility in the equity and credit markets. Our strategies performed well within expectations during this time of uncertainty.

Conservative Growth and the new Conservative Value strategy outperformed their benchmarks this quarter, but our other strategies gave back some of their earlier gains.

All of our strategies incorporate a trend-following component. Some of the trends that drove returns earlier in the year seem to have come to an end this quarter. Like other trend-following strategies, Pivot Point's tend to give back some of the earlier gains until positions that are no longer working can be exited.

When new trends emerge, our strategies will find them and profit from them provided they occur in sectors that are compatible with the strategy objectives.

It will be interesting to see what the final quarter of the year brings. At present the market seems to be torn between credit fears and the trusting belief that the Fed will fix everything. It is very possible that there will be more volatility going forward as market participants converge on a consensus view of the state of the economy.

Performance

Please follow the links under 'strategies' on the left to view monthly returns and a comparison to an appropriate benchmark.

Conservative Value (NEW)

The Conservative Value combines the stock selection principles of Dynamic Value with the ranking technology of Conservative Growth. The track record for this strategy starts in February 2007.

This new strategy is typically has about 50 stocks in the portfolio and trades much less actively than Dynamic Value.  While this slower turnover should make the strategy a little less quick to respond to changing market conditions than Dynamic Value, it has handled the various market fluctuations since its inception quite well. It and Conservative Growth are our only two strategies to outperform the benchmarks this quarter.

Please give us a call if you would like to learn more about this strategy.

Current Holdings