Investment
Strategies, Inc.
Strategy Update

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General Market Environment

Monthly Return Table

Notable & Quotable

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June 1990 to October 1990

General Market Environment

This period, number seven for ISI, was another historically short bear market of just five months.  It was also very mild by historical norms.  The general market was spooked by the crisis in the Middle East and by a less than helpful Federal Reserve which had been on a tightening course for several months in 1989 and 1990.  It was also a reversal in Fed policy that helped the new bull market get started in late 1990.  Our risk-management techniques again showed their value, as the table illustrates.

Monthly Return Table

Following are returns, in percentage, by month:

† Figures are for various CDA fund indexes that best match our GSA. From May 1982 through June 1989 the figures are for aggressive stock funds. From July 1989 to September 1996 balanced funds best compare to our triple option strategy (which employed stock, bond and money market funds). Starting October 1996 an unweighted index of 5 groups (International, Aggressive Growth, Growth & Income, Bond and Precious Metals) is used. This best matches our global asset allocation approach. CDA's figures do not include acquisition or redemption costs, but do factor internal expenses.

‡ Management Ratio (M/R) measures our ability to out-perform a buy & hold strategy (using the above described CDA Fund Index) for each market type and cumulatively for the various full market cycles listed above. It compares the ending value of $1.00 invested at the beginning of each period. The Management Ratio is determined by dividing GSA's performance by the CDA. A ratio above 1.00 indicates superior performance (and vice versa). Our goal is +1.00 over any full market cycle combination.

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Notable & Quotable

In our Client Meeting 90-2 held in Colorado Springs on October 24, 1990 the third and final part was titled "The Next Bull Market - a Real Barn Burner".  In this part of the meeting we presented the overview that the current bear market showed signs of ending and that the next bull market had great upside potential.  The meeting was one of several client meetings and seminars that we have conducted over the years. It was video taped and sent to out-of-state clients.   History would mark the 1990 low on October 31st.  From this point, the current bull market started.  The current bull is the longest ever, but not the greatest percentage gainer.  Our Client Meeting 90-2 was within five trading days of the end of the then current bear.  The rest is history.

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