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MCIM Methodology

Some investors and investment professionals choose their securities, run their portfolios, and base their decisions on emotional energy they pick up on the Internet, in media sound bites, and through the product offerings of Wall Street.  They move cyclically from fear to greed and back again, most often gyrating in precisely the wrong direction, at or near precisely the wrong time.

The MCIM methodology combines risk minimization, asset allocation, equity trading and base income generation in an environment whose time frame recognizes and embraces the reality of cycles. It attempts to take advantage of widespread "fear and greed" decision-making by others, using a disciplined, patient, and common sense process.

This methodology embraces the cyclical nature of markets, interest rates, and economies and the political, social, and natural events that can trigger changes in cyclical direction. Little weight is given either to the short-term movement of indices and averages, or to the idea that the calendar year is the playing field for investing. The cycles themselves suggest the irrelevance of calendar year analysis.  Investment portfolios are unique and seldom come close in content to an index or average.      

The MCIM methodology is not a market timing device in any sense of the word.  Its disciplines will signal managers to add equities during corrections and to take profits during rallies. As a natural (and planned) effect, portfolio cash levels will increase during upward cycles, and decrease as buying opportunities increase during downward cycles.

MCIM management makes no attempt to pick market bottoms or tops, and strict rules apply to both buying and selling disciplines. Managing an MCIM portfolio requires disciplined attention to rules that are designed to minimize the risks of investing.  Stocks are selected from a small, easy to manage universe of stocks.  The companies are multi-national, profitable, dividend paying and NYSE companies

For income, MCIM utilizes closed-end funds.  The funds are, for the most part, actively managed, closed-end funds, investing in corporate and government fixed income securities, income paying real estate, energy royalties and tax exempt securities. No open end Mutual Funds, index derivatives, hedge funds, or futures betting mechanisms are utilized inside any MCIM portfolio.

The equity selection process focusses on high quality securities which pay dividends. All securities must generate some form of regular income to qualify for inclusion in portfolios and no security is ever permitted to become a concentrated holding.  Diversification is a major concern on an industry or sector level.  Investing in large U.S. multi-national corporations provides global diversification.   

Risk Minimization, The Essence of Market Cycle Investment Management

Risk can be compounded by lack of knowledge, multiplied by gimmickry, and exacerbated by emotion. It is reduced with education, ameliorated with cost-based asset allocation, and managed with disciplined: selection quality, diversification, and income, the QDI.

Risk minimization requires the identification of what's inside a portfolio.  Risk control requires disciplined, daily decision-making. Risk management requires a selection process from a universe of securities that meet a known set of qualitative standards.

The Market Cycle Investment Management methodology helps to minimize your financial risk in several ways:

  • It helps create an intellectual "fire wall" that precludes the investment of excessively speculative products and processes.
  • It focuses decision making by providing clear rules for security selection, purchase price criteria, and profit-taking guidelines.
  • Its cost-based, working capital asset allocation operating system monitors asset allocation with every investment decision while working to increase the base income.
  • It strives to assure that poor diversification will not creep into the portfolio and that unproductive assets will be eliminated in a rational manner.

No warranties or representations are made regarding the suitability of the use of this information or the strategy discussed.  There is no guarantee that the strategies discussed will be effective.   Investing involves risk, including possible loss of principal.  The information presented does not take into consideration tax implications or other transactions costs, which may significantly affect the economic consequences of a given strategy.