2010 Performance Review

By on January 16, 2011

The year 2010 was marked by a stock market that was strong in the spring with the S&P 500 closing as high as 1,212 on April 26, 2010.  A subsequent vicious correction ensued with the S&P 500 closing at a low of 1,022 on July 2, 2010; a drop of nearly 16% from the high.  From there the market zigged and zagged its way higher to close the year at 1,257; a jump of 23% from the April 26th low, and a rise of 15% for the year.

The bond market was remarkably strong through August 2010, when it got tripped up and ended the year in a corrective phase.

The Tactical Timing System initiated one signal during the year which was a buy on May 25, 2010.  The S&P 500 hit a low of 1,040 that day which was less than 2% off the year’s low.  There was one arbitrary move made on October 6, 2010, when all positions in Treasury Inflation Protected Securities (TIPS) were sold and moved into short-term corporate bonds.  This was a mildly successful move as TIPS dropped approximately 5%, while the short-term bonds were also weak, but about a third less so. 

Despite the successful timing moves, it was a somewhat disappointing year for the SMA portfolio.  The portfolio was too conservatively positioned at the beginning of 2010 to fully capitalize on the market’s strong year-end advance.  While the SMA portfolio performance looked relatively spectacular at mid-year, the six month rally in stocks from July through December made it look feeble, especially in relation to the small and mid-cap indices (click to enlarge).

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