Tango5 MembersUpdate                                              052408 

Down Week in the Market & Oil Prices 

This was a rough week if you were in the market like I am. The ETF Aggressive and ETF Moderate model portfolios had a loss, ETF Conservative was flat, and Endurance had a gain(Last Week Gain: 0.87%), it was doing it's thing of not being correlated with the equity markets. When investing in the markets we will have bad weeks and good weeks. The three charts below are to get you thinking longer term. This first chart shows the last three buy periods including the current buy period. You can see the last week at the right hand side of the chart. All these portfolios are beating the S&P500. The stats are for the period shown at the top in black, 171 market days or about 8 months.  

The next chart shows Endurance in red and the period shown is from the begining of testing for Endurance 390 market days or about 18 months. Again over this period we have outperformed the S&P500. 

The last chart is the mutual fund Tango5 Sample Portfolio (TAADJ blue) from inception about 3 1/2 years. Which also had a down week.

The question today, is this down turn just a correction in the current uptrend or the start of another down trend that will take us back the the March low or below? At the moment there is nothing to indicate this is something more than just a normal correction in the current uptrend. Next week will probably tell the story. Technically the market is overbought and ripe for a rebound. I would expect the markets to be higher at the close of next Friday than the close last Friday (yesterday). But your best bet is to follow the models. As I said in my talk in Pittsburgh, the financial markets "are totally irrational", so no rational thinking will be useful in determining where the markets are going, thats why we have models to follow so we don't shoot ourselves in the foot.

There was a very interesting article last week on something called " The Export Land Model for Energy Prices" and written  By David Galland, Managing Director, Casey Research. This was followed up this morning by an article "Whither the Price of Oil?" by John Mauldin. The price of oil is on everyones mind these days, is it going to $200/barrel or dropping back to $70/barrel? Both articles make a case for higher oil prices in the long run, but the discussion in David Gallands article is especially enlightening. For example Mexico supplies 14% of our imported oil, and in ten years they will become an importer of oil, not an exporter as is the current case. Many major oil suppliers face this same fate over the next decade or two.

These two articles have some new and interesting insights and are worth your time.
For the article by David Galland "What Export Land Model Means for Energy Prices"
Casey Research - Casey Energy Speculator
For John Mauldin's article "Whither the Price of Oil?"
http://www.frontlinethoughts.com

Keep your Hard Hats on, Don

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