HEDGEfolios year-to-date stock performance for 2009 (through 03/31/09 close) was up 18.76%.

Over the same time period, the S&P 500 index was down -11.64%.

At the end of March, the HEDGEfolios universe consisted of 3,228 stocks.

Commentary: The S&P 500 had a fantastic month of March which only partially made up for the tough times in January and February.  While the S&P 500 advanced 9.36% in March, the first quarter ended down 11.64%.   HEDGEfolios advanced 10.43% during this month and has outperformed the index to end up 18.76% year-to-date.   Last month I said I was looking for a rally, it happened…and I went from 39% UP signals to 84% UPs at the end of the quarter.   I am starting to see some early warning signs but not enough to believe the bear market rally has ended.   I’ll do my best to let you know when I see a change in direction.

Prior Years’ Performance:

• 2008, HEDGEfolios performance was +30.51% vs. -38.47% for the S&P 500 index
• 2007, HEDGEfolios performance was +21.78% vs. + 3.55% for the S&P 500 index
• 2006, HEDGEfolios performance was +25.54% vs. +13.62% for the S&P 500 index
• 2005, HEDGEfolios performance was +19.99% vs. + 3.00% for the S&P 500 index
• 2004, HEDGEfolios performance was +31.19% vs. + 9.00% for the S&P 500 index

Disclaimer: Nothing in my performance quoting is intended as an advertisement or in any other way meant to encourage anyone to subscribe to HEDGEfolios. These performance figures have not been audited or verified by an outside party and are NOT in compliance with the CFA’s AIMR Performance Presentation Standards. They don’t net out any transaction costs such as commissions or management fees and are not a total return calculation as I do not include dividend yields or any compounding factor. These performance figures cover a hypothetical portfolio of the entire HEDGEfolios stock universe with an equal weighting of each security. The calculation is simply the cumulative total of all gains and losses from the signals during the period in question.

I am not impressed by the Obama/Geithner public-private partnership to rescue the planet or at least remove the “toxic assets” from the financial system so we can “get credit moving again” and “fix the economy.”   Actually, “not impressed” is weak terminology.   Let’s just say that I think the plan is pathetic and a continuation of the destruction that was begun during the last administration.

I can see how it sounds like a great scheme to socialists / Keynesians who believe that only the government can solve this crisis.   To them, my view is irrelevant or wrong or both.   Maybe even throw in heartless or greedy or in their special way, even unpatriotic.   They have their opinion.   I have mine.  Considering that I have a bit of a track record to evaluate when I have repeatedly warned on here that the past government plans would be failures (go ahead and do some reading if you need to), I won’t go into my reasoning again.  I’m comfortable making the comments and having the results speak for themselves.

Suffice it to say….you are either a believer or you are not.

I happen to believe that government intervention in markets and artificially affecting asset prices are ineffective and destructive measures.  If you already believe as I do, you will not benefit from detailed explanations.

If you happen to believe in the opposite view that governments have an obligation to do “what only they can do” to solve all our problems, there is likely nothing I can say to change your view.  Hell, it seems even the results will not change your view.   After all the government manipulations and programs during the past 2 years, I still hear a growing chorus that the next new plan will do the trick.  To them, it’s not reasonable to evaluate the failure of past programs.  To them, it seems that the past programs haven’t been given enough time to work or that they didn’t get enough money.     Give them more time…give them more money….give them another program to help make previous programs work……   To the socialists / Keynesians nothing is enough when it comes to government actions.  As it relates to the PPIP, it was not surprising to hear the preparations for future failure with comments like “3 years may not be long enough” or “$1 trillion may not be enough.”

You are either in power, or you are not.  The reality is that the socialists / Keynesians are in charge.   People like me are not in charge and we are getting quieter and weaker.

When I stopped normal blogging last fall, I emailed 3 newsletters to readers that asked for them.  I made a simple request….. “I ask that all recipients do not forward this to anyone or reproduce it in any way or publish it in any format or do anything with this other than read and think.”  I guess that was too much to ask, so I’ve decided to bring those offline posts onto the site.  I’d rather that my work was distributed by me than by others.   So if you haven’t already read them, beware…..they are long and they are old, but you might enjoy the retrospective look and evaluate what ended up happening with markets since October.   How right or how wrong was I back then about how things would develop in the 6 months between then and now?    These posts will stay here for at least one day and then they will be archived on their original authorship date.

EMAIL NEWSLETTER #1 - OCTOBER 6, 2008 2:28PM

EMAIL NEWSLETTER #2 - OCTOBER 14, 2008 12:02 AM

EMAIL NEWSLETTER #3 - OCTOBER 20, 2008 12:13 PM

Two weeks ago, many smarties were advancing the the notion that the stock market decline since the presidential election or at least since the inauguration was somehow the fault of President Obama.  We were treated to “studies” of how terrible his first few months were for the stock market compared to similar periods of former presidents.   Of course, this is largely a bunch of crap that makes for interesting media filler but as for using it to make money or avoid losing it….it’s useless.   So for all you Obama-bashers that blamed him for the decline, please think through the other side of that logic.   If a declining market is due to him, do you give him all the credit for the 20% rally? Have you totally conceded the loss of capitalism?

Suggesting the market’s 7% rally on the latest government bailout program is an endorsement (or proof) that the latest scheme will work better than all the previous failures is akin to a pimp suggesting that his whore gives better sex than all the rest or a drug dealer who says his weed gives a better high.  Maybe they do, maybe they don’t…but in the short term, if it felt good….who is going to argue?

Far too many people love to believe the market knows all or that a selloff means the plan will fail or a rally means it will succeed.   Today’s rally is evidence of nothing other than stock prices are higher today than Friday.   It was a convenient opportunity for people who love to exploit bailouts for a trade.   That’s it.  Nothing more.  Nothing less.  And when all the true believers wake up from their high, they might just realize they got fucked.

“Now is not the time for partisanship!”   Really?   - When is the right time for partisanship?

“Now is not the time to cut government spending!”  Really?  - When have you ever heard a Keynesian suggest that the time is right to cut government spending?

“Now is not the time to raise taxes!”  Really? - When have you heard a supply-sider say it’s time to raise taxes?

“Now is not the time to cut taxes!”  Really? - When have you heard a demand-sider suggest it is time to cut taxes on people that actually pay taxes?

“Now is not the time for protectionism”  Really? - When is the time for protectionism?

“Now is not the time for consumers to stop spending.”  Really? - When should we start being responsible?

“Now is not the time to sell stocks.” Really? - When have you heard a “bottom-calling” permabull say you should sell?

“Now is not the time for profits.” - Really?   Really?   When is the time for losses?

I keep hearing nonsense like the above.   We all have our ideologies.   It is extremely disingenuous to make these “now is not the time” statements to advance a position that the speaker has never opposed or where it would be absurd to ever say.

Now is the time.  Now is now.  We need to start doing the right things regardless of whether we believe the time is right to do it.  We need to take a stand.  We need to stop pretending we can do the right things at a later time when we never intend to do those things at any time.

If not now, when?   If you really believe in something, now is the time to do it.

Now that a year has gone by since I asked you to Pay Attention To AIG and the eventual nationalization of USAmerican International Group that happened 7 months later, I think it’s time to review given that they keep getting more money and better terms on the past deals.

Last September, the Bush Administration and some of the current group (Bernanke and Geithner) supported the concept of taking over AIG to avoid systemic failure due to CDS exposure, especially with counterparties that included the very largest banks and investment banks in the world.  That was their opinion and since they are in power and people like me are not, they made the choices they made.  I know they said they didn’t want to do it and hated to do it and had no other choice, but it’s time to look back at how this decision was handled and the promises that were made.

Will anyone ever be accountable for lying to the American taxpayer?  Can you really believe that this was just an honest misunderstanding or statements made with good intent regardless of how naive those intentions would have been?  Can you just toss this one up to government officials who were basing their decisions on all that they knew at the time and it was only that the facts changed since last fall or that things got so much worse than they were at the beginning?  There are only a few choices - either they lied, they are incompetent or they are just doing their honest best under difficult circumstances.  You pick.

Please take the time to remember how they, questionable analysts and the media spun this as an “investment”.  Here is one article from back then that proposed the absurdity of the government  making money on the AIG “investment”.  Here is another.   I am sure you can find more examples and I really wish you would take the time to do some research and read through old articles to see how this was sold to the American taxpayer.

This is one of my favorite quotes from back then:

Analysts said Wednesday the odds are pretty high that the rescue will be a good investment for taxpayers, with AIG paying off the loan at a relatively high interest rate and the government potentially making money off its nearly 80 percent equity stake in the company.

What a bunch of suckers the American public was to buy into that nonsense!   And since this is how almost every bailout has been sold to us by our elected and appointed officials, it is amazing how we just keep taking this bullshit.  Sadly, I expect it will continue.  I don’t think the politicians believe we can do anything about it.

How much of the $162 billion “investment” in AIG do you think taxpayers will recover?  How much do you think our politicians believe we will recover?   When they come back for more, how much of that will be recovered?   Do you still think the “odds are pretty high that the rescue will be a good investment for taxpayers”?

So you don’t leave this post confused about my stance, I’ll just say it…..The American Government Doesn’t Make Money.   They take money.  They take money from current taxpayers.  They take money from retired taxpayers.  And most importantly, they take money from future taxpayers by growing the national debt.  In fact, I can’t imagine a more heinous example of “taxation without representation” than knowingly tagging children who have not yet begun to vote or to work or to live.    Go ahead and show me where the Founding Fathers wanted the government to make money by nationalizing a company or industry.   Go find it in the Constitution.  Find it anywhere other than the mouths of liars and incompetents.

The government is here to tax and spend in ways to provide for public good.  Don’t confuse that legitimate purpose with the twisted applications of your taxes, your parents taxes and the taxes of future generations for bailouts or stimulus plans or porky earmarks or unnecessary military actions or payoffs to political contributors or entitlement programs or…..

The next time you are tempted to buy stocks or some other investment because you hear the government is bailing us out, please ask yourself a few questions.   If this was someone coming to you for a loan or with an investment opportunity and that person has no history of making money and a long history of lying and breaking promises, would you hand over your money, would you take money from your elders to invest, would you raid your child’s piggybank?

I know last week hit the index hard and of course, if you are into following index support levels, it has not been good.

As for me….I am getting more bullish.   I saw massive improvement in technicals of many individual stocks that I feel are more important to analyze than the index.

Mid-January, I issued the First Warning of 2009 telling you to watch your portfolios.  Now I am starting to head the other direction.

If you are short or if you do not have your buy list prepared, please pay close attention.  As always, I don’t tell you what to buy or sell…do your own homework.