Investment
Strategies, Inc.
Strategy Update

www.isi-su.com.

Click icon for a 1-page, via PDF, with highlights of ISI's background, performance record and other accomplishments, and subscription services currently offered to investors.

pending update

"There are two rules of investing.  The first rule is don't lose.  The second rule is don't forget rule number one."  Benjamin Graham, author, The Intelligent Investor, considered the bible for sound investing

Cumulative, from inception in 1982 to closure in 2002, ISI's flagship service, Risk Managed Equity Program, outperformed its benchmark in absolute and risk-adjusted terms, and with a volatility factor (or beta) less than 1/3rd the S&P 500 Stock Index.

This special 2-page, 11x17 booklet format, report celebrates nearly 20 years of ISI's absolute performance compared to our stock market benchmarks and to risk-free treasury bills, and for our risk-adjusted management.  Presented here are Pages One and Four.

The graph on Page One and the numeric tables on Page Four provide a comprehensive summary of each market type (bull and bear) and benchmark-beating performance for the 5.5 full market cycles over ISI's entire 19.7 year history as a registered advisor.

While typically under-performing its benchmark in rising bull market, ISI dramatically out-performed in declining bear markets to produce superior results for each and all of the market cycles listed.  Notable, too, is the fact that ISI produced a net-gain for 200 months or 85% of the 236 months of operations, compared to 65% for its benchmark.

ISI's Track Record 1982-2001

Click for a 1-page summary PDF of  ISI's Market Cycle Results and Mgt Consistency

Consistent with judging results over a full-market-cycle, Modern Portfolio Theory or MPT statistics measure diversification, risk and risk-adjusted rate of return.  Sophisticated investment analysis includes the combination of absolute performance comparisons and risk-adjusted rate-of-return rankings relative to other investment managers, mutual funds and market indices. 

Click here to view .PDF for sample of an ISI MPT Client Report which provides an excellent explanation of MPT and the three components of MPT statistics.  This report was prepared for an ISI client.  In addition to the listed MPT stats, it also provides the account's ranking within the mutual fund universe for risk-adjusted return.

ISI's Market Cycle Results and Management Consistency

 sample MPT report to ISI client

ISI's history . . .  The roots of Investment Strategies, Inc. date to May 1980 when Richard & Ellyn Sabby opened a branch office for Investment Management & Research, Inc. or IM&R (a division of Raymond, James & Associates, member of the NYSE) in Colorado Springs, CO.  Mr. Sabby had been a registered rep with Dean, Witter, Reynolds and Boettcher & Company, but the desire for independence drove the decision to start his own business.  IM&R offered independence and self-reliance.  In May 1981, Richard Sabby completed and graduated from the 5-level Certified Financial Planner or CFP educational program conducted by the College for Financial Planning.  In June 1981, Mr. Sabby completed and passed the NASD requirements to become a Registered Securities Principal with IM&R.  Research that led to ISI's objective approach began in the summer of 1981, during the difficult bear market that started in November 1980, just after the presidential election.

The entrepreneur spirit continued and Investment Strategies, Inc. (ISI) was incorporated in September 1981 in Colorado by Richard and Ellyn Sabby, and registration with the Securities and Exchange Commission became effective in March 1982.  A key driving force in the creation of ISI was the Sabby's desire for a fee-only investment management firm.  Mr. Sabby ended his business connection with IM&R and terminated financial planning activities to focus 100% on portfolio management with ISI. 

ISI maintained its public SEC registration for nearly 20 years before withdrawing to continue as a private manager in early 2002 under the SEC provision for private investment advisors.  As such, ISI does not hold itself out to the public as an investment advisor and has less than 15 investors in its private management  programs.  With a reduced profile, ISI placed maximum effort into research projects.  After an estimated 10,000+ hours, several new mathematical models (see research section below) were developed and launched into beta-testing.  One model, the Leveraged Momentum Model-Risk Adjusted (LMM-RA), will be available for subscription in the near future.

In July 2005, ISI's founders incorporated a new entity, Investment Programs LLC (IP), for public investors.  IP then applied for registration with the SEC as a federal-covered investment advisor under a provision for advisors with Internet-based platform for operations.  The SEC granted registration on September 30, 2005.  IP will offer investment management services to investors employing ISI's mathematical models, under license, via the Internet.  See Investment Program's website ip-ria.us for more information about IP's management programs.

• Benchmark beating absolute-performance based on full market cycles
• Superior risk-management, based upon Modern Portfolio Theory or MPT statistics
• Absolute & Unshakable Integrity, based on total loyalty to investment clients

ISI's top objective in all mathematical models and related management programs has been and remains to provide superior return, relative to a benchmark, for a full market cycle, usually covering a 3-5 year period, and to achieve superior risk-adjusted returns (or alpha) over this same period.  The oldest ISI mathematical model has stock market data and subsequent strategic application from 1914.  (See Research section below.) 

Although, past performance doesn't assure future returns and management success, it is still a very important technique to evaluating an investment manager.  ISI's  historical performance record illustrates its commitment to the achievement of its performance goals.  It's notable that ISI's results typically lagged the benchmark in rising markets, but significantly out-perform in declining markets.  

Click here to view .PDF for  ISI's Final Client Report - December 2001 which summarize its nearly 20 years, covering 5.5 full-market-cycles, of successful operations as an SEC registered investment advisor.

ISI was one of the first to employ the most accurate performance method, time-weighted rate of return, on a net basis, and to provide detailed reporting of both absolute and risk-adjusted results.  Reporting also disclosed relative ranking.  The focus on net-after-cost reporting also helped provide incentive to keep ISI's fees as low as possible.  ISI's management fees, historically, were well below industry averages.  ISI's focus client suitability, performance and service have aimed at client retention.  As of September 30, 2005, our average client relationship has a longevity of 20.6 years.  (This is due, in part, to ISI having been closed to new clients for several years.)

Core to ISI's philosophy has been policies and procedures to maintain the highest level of integrity with our clients.  To help this ongoing effort, ISI or its corporate officers and staff have not accepted compensation in any form, direct or indirect, from anyone other than from our clients.  All client compensation, in any form, is disclosed and accounted for to each client.  

Also, vital to maintaining a relationship of trust, ISI and its staff have consistently invested their own funds in the same programs (not necessarily all programs) as our clients.  As such, ISI insider accounts trade in the exact manner and in a similar manner with all other ISI clients in the same program.   These policies and procedures have been in place since ISI's inception, and come to a sharper focus in recent times, given the scandals within corporate America, the mutual fund industry and the money management profession.

from ISI's archives . . . 

• 1982 - Price-Trend Indicator - PTI

• 1982 - Supply-Demand Indicator - SDI

• 1983 - Monetary Indicator - MI

• 1984 - Currency, Metals & Commodity Indicator - CMCI

• 1985 - Interest Rate Trend Indicator - IRTI

• 1988 - Relative Strength Fund Selection Method - RSFSM

• 1988 - Triple Option Strategy - TOS

• 1988 - Risk Adjusted Performance Ranking - RAPR

• 1989 - Monetary Aggregate - MA

• 1989 - International Rate Trends - IRT

• 1989 - Macro-Market Indicator - MMI

• 1990 - Blue Chip Indicator - BCI

• 1992 - Banking System Liquidity - BSI

• 1992 - Global Stock Market Momentum - GSM

• 1992 - OverBought/OverSold - OBOS

• 1996 - Three-Dimensional Composite - 3DC

• 1998 - Global Risk Exposure Profile - GREP

• 1998 - Major Stock Market Indicator - MSMI

• 1998 - Long Term Trading System - LTTS

• 1998 - Short Term Trading System - STTS

Initially, ISI's research focused on technical analysis.  With the development of the Monetary Indicator in 1983, ISI added the influence of monetary factors, such as Federal Reserve policy, on the financial markets.  By 1989, ISI's Macro-Market Indicator encompassed a broad and deep spectrum of technical, fundamental and monetary indicators.  This multi-disciplined approach expanded to a global perspective in the 1990s.  For sure, not all ISI indicators proved successful.  Several failed, but key indicators continued to evolve (i.e. Monetary Indicator).

The great stock market bubble of the late 1990s rendered ISI's mathematical economic measuring tools, such as its Macro-Market Indicator, ineffective.  ISI's programs lagged or stumbled in the ever-inflating bubble. This was consistent with ISI's research, especially from an in-depth study of the 1920-30s when the stock market and economy experienced a similar bubble.  To many "new era" investors & strategists, ISI's approach was obsolete.

From this difficult environment for ISI, a major research effort was launched in 1999, focused on the use the application of leverage index-funds in conjunction with the S&P 500 Stock Market Index.  The S&P was selected for the following reasons:

• The S&P 500 Stock Index is considered the leading benchmark for the overall stock market.

• In conjunction with the Dow Jones Averages, the S&P has the greatest depth of historical data.

• Without question, the S&P 500 offers the most liquidity and thus fair-pricing of any market index

• The ability to employ leveraged and trading-flexible index-funds based upon the S&P 500

It's estimated that over 10,000 research hours went into the all-encompassing pursuit of mathematical models, time-tested from December 1914, that would provide superior results, both in absolute and risk-adjusted terms, for calendar and market-cycle periods.  The effort paid off with the development and launch of the following:

• Risk Adjusted Model - RAM

• Triple Option Plus - TOP (under exclusive license to Investment Programs LLC)

• W2040 Weekly Stock Market Model - W2040 (provided as a free community service; can be with or without leverage)

Below are recent examples of ISI's continuous research effort.  The first, ISI's W2040 Weekly Stock Market Model is offered as a free community service to investors.  The second model listed, RAM, is available for subscription and is licensed to Investment Programs LLC (IP) as described above.  The third model, TOP, is under exclusive license to IP.  See ISI subscribers page for more details.

The 4-page, 11x17 format provides a graphic and narrative overview of ISI's W2040 from its mathematical inception on December 31, 1899 to September 30, 2006. See firsthand how W2040 has outperformed its stock market benchmark by 3.52 times, cumulative from the 1900 inception, and with less than 1/2 the risk, as measured by the Nobel awarding winning Modern Portfolio Theory or MPT.  (PDF update W2040-r307)

ISI's W2040 Model, cum (password required)

This seven page report starts with a graphic and narrative Front Page which provides a quick overview of the current market that began with the 3/24/2000 peak. This is followed by five pages of tables which include W2040's weekly allocations and the returns for the stock market benchmark and risk-free treasury bills. Page Seven provides W2040's overall Risk & Reward Profile from inception in 1914 to 9/30/2005.  Update to 3/30/2007 is pending publication.

ISI's W2040 Model - Current Market Cycle

Click link to right and provide password to view .PDF for latest update of  ISI's RAM cumulative report.  (Update LMM-RA07-3). 

RAM's introductory report is a 8-page, 11x17 booklet format, which provides a graphic and narrative introduction of LMM-RA from its mathematical inception on December 31, 1918.  The cumulative chart (and supporting numeric data) illustrates, RAM has outperformed its stock market benchmark.  Its secret to success is risk-management during declining markets. While typically under-performing in rising markets (see summary on Page Four), RAM has dramatically outperformed its stock market in down markets. Thus, over a typical full market cycle, including both up & down markets, RAM has outperformed its stock market benchmark in both absolute & risk-adjusted terms.  Of course, past results don’t assure future performance

ISI's RAM (password required)

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Please contact us with any questions or further inquiry.

Electronic mail

Postal address . . .   P.O. Box 1189  Monument, CO 80132

Telephone . . .   (719) 481-4502 or toll-free (800) 284-5034

FAX . . .   (719) 481-4388