Expert: Paul Henneman - 2/23/2006

Question
I am considering subscribing to valuengine and i have the
following question: Out of the model portfolios is there a
particular portfolio which should be more tax efficient ?  

Answer
Michael,
  Thank you for your question! I do have some suggestions for you.
   First, it is true that the portfolios are not designed with tax efficiency in mind. The theory is that you only pay taxes if you make money! We have studied this, and the excess returns that you can easily achieve with more frequent adjustments to portfolios (this is not tax friendly) will raise returns by more than the tax implications. To put it shortly: You end up with more in our accounts by not worrying to much about taxes.
   However, if taxes are of concern, the ValuEngine View Newsletter is actually probably the best strategy. It is a portfolio of stocks, adjusted about once a month. But usually only about half of the portfolio changes on a monthly basis. The portfolio is up about 45% since May of 2005 when we began this strategy. If interested, you can read more or subscribe at this link:
http://www.valuengine.com/NLPerformance
    We have not tracked a portfolio like my last suggestion as yet. However, you could subscribe to www.ValuEngine.com and create a yearly adjusted portfolio. This would take advantage of tax breaks for holding a stock for at least one year. You could apply the same strategy we do monthly, but do it yearly: Use the screen scection to list the strongest stocks forecasted for the next year (Instead of next month).
   I hope this helps! Please do not hesitate to follow up with me. I am at your service!

Sincerely,
Paul Henneman
President
ValuEngine, Inc.
www.ValuEngine.com
www.VEInstitutional.com
www.VEReports.com