JAY TAYLOR

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The Value
Investor

Jay is a former banker and value investor whose picks have greatly outperformed the S&P 500 since 2000.
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NEWS & COMENTARY
News and Comentary

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Gata Gold Visit The Gold Anti-Trust Action Committee

MODEL PORTFOLIO

Portfolio Update

January 1, 2000 - September 30, 2009

While 2008 was the worst stock picking year since we began publishing in 1981 we are still considerably ahead of the S&P 500 since 2000. We are now back on track and putting more space between our portfolio and the S&P 500. A $1,000 in our hypothetical Model Portfolio is now worth $2,884 compared to a like amount invested in the S&P 500 which has increased to only 1,057. We fully expect this year to continue to bounce back for us, with gold mining shares leading the way. The economics for gold mining are now the best they have been in many years. We have recorded a gain of well over 50% so far this year.

model portfolio chart

Our June 30, 2009 Model Portfolio

Model portfolio

Our Low Budget/Low Maintenance Model Portfolio

Model protfolio, low budget

Year 2000 marked the beginning of a secular bear market in stocks that we think will last 15 to 20 years. We constructed our Model Portfolio on January 31, 2000, because we believed a secular bear market in stocks was born. Because gold and gold stocks are negatively correlated with the market in general, gold and gold shares are the backbone of our Model Portfolio.

How Are Returns for Our Model Portfolio Calculated?

Our Model Portfolio is a hypothetical portfolio. That is to say, we do not run an actual portfolio exactly like the one we use as our Model Portfolio. In its construction, we apply the following methods and assumptions:

Various sector allocations are chosen including producing gold and silver stocks, gold and silver exploration stocks, inflation hedge stocks, such as energy (including uranium mining stocks) and base metal mining stocks, as well as “essential technology” stocks. (We define “essential technology” as those companies that can reduce the cost of producing the most basic life-sustaining products, such as water, energy, and food.)

At the start of each year, a portfolio allocation is made for each of these sectors as well as an equity hedge sector (the Prudent Bear Fund–BEARX) and a bond hedge sector (the Rydex Juno Fund–RYJUX).

It is assumed that each stock within each sector is equally weighted at the start of each new year.

The total gain for a given sector is simply the sum of all the gains and losses, divided by the number of stocks in that sector. The percentage of gains or losses of each sector is then multiplied by its respective weighting, and the sum of the various sector performances is the Model Portfolio’s performance.

Gains are not annualized. So, for example, a stock that was recommended on December 1 and gained 100% by the end of the year enhances returns no more than a stock that gained 100% over 12 months. The Model Portfolio’s gain or loss for each year is simply the total of gains for each sector, times the respective weighting of each sector.

Address: 60-03 72 nd Street, PO Box 780555, Maspeth, NY 11378-2915
Telephone: Toll-Free 1.800.715.8426 | Fax: 1.718.457.1426

© 2007 Taylor Hard Money Advisors Inc. All rights reserved.