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Saturday, January 30, 2010

Returns -- January 2010

The Covered Calls Advisor Portfolio (CCAP) underperformed the Russell 3000 benchmark in January 2010. The primary reason for this result is the significant overweighting of emerging markets (especially China) in the portfolio. This asset class underperformed in January primarily as a result of the adverse market reaction to credit tightening in China. Despite this result in January, the Covered Calls Advisor continues to overweight emerging markets as this advisor's country rankings indicate that China continues to be value-priced relative to the major developed markets of the U.S. and Europe. The Covered Calls Advisor Portfolio results for January 2010 as well as the historical results for prior years in comparison with the Russell 3000 buy-and-hold benchmark are as follows:

1. January 2010 Results:

CCAP Absolute Return (Jan 1st through Jan 31st, 2010)
= -4.98%
($261,772.44-$275,491.90)/$275,491.90

Benchmark Russell 3000(IWV) January 2010 Absolute Return = -3.72%
($62.85-$65.28)/$65.28


2. Prior Years Results:

The Covered Calls Advisor Portfolio (CCAP) was begun in September, 2007. The annualized returns achieved for 2007, 2008, and 2009 compared with the Russell 3000 benchmark results were as follows:











As a reminder, the Covered Calls Advisor uses a bottom-line performance measure to determine overall portfolio investment performance results -- it is called 'Total Account Value Return Percent'. A simple example demonstrates how it is calculated:
If the total CCAP portfolio value was $100,000 at the beginning of the calendar year and $110,000 at the end of that year (and with no deposits or withdrawals having been made), then the 'Total Account Value Return Percent' would be +10.0% [($110,000-$100,000)/$100,000]*100.

Despite the bearish market in January, the Covered Calls Advisor's current Overall Market Meter rating (shown in the right sidebar near the top of this page) remains at "SLIGHTLY BULLISH". The corresponding investing strategy is to on-average sell 2% out-of-the-money covered calls for the nearest expiration month (now Feb2010).

If you have any comments or questions, please feel free to submit them -- they are always welcomed. Click the 'comments' link below. If you prefer confidential communications, my email address is listed at the top-right sidebar of this blog site. Also, if you haven't already done so, consider joining the justcoveredcalls Yahoo!Group site (link), which is a very good forum for anyone interested in additional information and discussion related to covered calls.


Regards and Godspeed,

Jeff

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