We’ve executed a trade in both the Conservative and the Aggressive Powerfund Portfolios today, September 19th 2011. The main goal is a small increase in stock fund allocation by 5% for the aggressive portfolio and 1% for the conservative portfolio because stocks, while riskier, are more attractively priced than bonds after the slide in stocks this year. More important to our methodology, fund investors are taking money out of stocks and going into bonds at elevated levels.  ...read the rest of this article»

We're making trades in both the Conservative and Aggressive Powerfund Portfolios, effective June 30th, 2010. ...read the rest of this article»

In recent commentary we noted pending trades to move us away from higher risk, cyclical bond and stock categories and towards lower default risk bonds and less cyclical stock fund categories. We want to be in fund categories that other investors are avoiding. During the last hurrah of this market comeback, investors are piling back into foreign markets, junk bonds, small cap, natural resource and commodities, and the like. ...read the rest of this article»

Our roughly 60% return in four months (double the overall market) in the Financials Select Sector SPDR ETF (XLF) marks a good exit point from financial services stocks. While financial stocks may have more upside, the bargains are gone and we don’t expect the sector to outperform the market going forward - the main reason to own a sector fund in the first place. For the time being we are increasing our bond allocation even though bonds are not screaming buys at current yields. We think we may see some more interesting stock fund opportunities in coming months. ...read the rest of this article»

We are making trades in six of seven Powerfund Portfolios. Broadly speaking these trades are: 1) to remove some closed end funds that are no longer a bargain because the discounts have gone away 2) to lock in large gains from shorting commodities 3) to increase our stock allocations slightly. ...read the rest of this article»

We know it is difficult to buy after losing significant money in the worst market drop since the Great Depression. Most fund investors are either sitting still or selling. We can’t do that at MAXadvisor – it is against our philosophy. ...read the rest of this article»

We're making trades in the Conservative portfolio. You can view the trade specifics in the before and after (pre- and post-trade) tabs for the portfolio. ...read the rest of this article»

Earlier this year, we cut back on our stock holdings and increased our longer-term bond stake. Since then, stocks have been hit hard (but have come back more than once), and interest rates on the ten-year government bond have fallen below 4% (down from well over 5% - the prevailing rate when we planned our last trade). Since rates have been ticking up recently based upon inflation fears, we’re not going to cut back significantly on our bonds across the portfolios quite yet, but we may do so in the coming months. ...read the rest of this article»

The recent market troubles have shown the shortcomings of funds that short. In addition to dropping high yield bonds (which have since fallen), we cut back on “normal” long-only stock funds in this portfolio in our last trade at the end of June. Because the stock market was getting overvalued we went with a long short fund because in theory investors would have a little less downside than a stock fund. ...read the rest of this article»

The conservative portfolio was up just 0.44% in May as bonds fell on rising rates. Stocks were very strong in May with the S&P 500 up almost 3.5%. Vanguard U.S. Value (VUVLX) and Janus Research (JARFX) were up 3.58% and 4.21% respectively, but the hits to bonds funds like Harbor (HABDX) down 1.38% largely wiped out the stock gains.

We are making trades in the Conservative portfolio, effective June 30th, 2007.

Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Conservative Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Conservative Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.

<b>Sales:</b>

• <b>Sell entire</b> high yield bond allocation: Vanguard High Yield Corporate (VWEHX) from 5% to 0%

• <b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 30% to 0%

• <b>Sell entire</b> international diversified allocation: SSgA International Growth Opportunity (SINGX) from 5% to 0%

• <b>Reduce</b> large cap value allocation: Vanguard U.S. Value (VUVLX) from 10% to 5%

<b>Buys:</b>

• <b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%

• <b>Buy new</b> intermediate term bond allocation: Dreyfus Bond Market Index Basic (DBIRX) to 35%

• <b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 5%

<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and to move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.

As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.

We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is wroth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.

<b>Redemption fee information: </b>

If you sell SSgA International Growth Opportunity (SINGX) within 60 days of purchase, you will get hit with a 2% redemption fee.

If you sell Vanguard High Yield Corporate (VWEHX) within one year of purchase you will get hit with a 1% redemption fee. While we’ve owned this allocation since 2002, if you are a new investor, wait until you can sell the fund for no redemption fee.

There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.

The aggressive growth portfolio was up 2.37% in May even though bonds were hit pretty hard. The shorter term bond holdings were only down slightly, but Harbor Bond (HABDX) down 1.38%. 

Stocks were very strong in May with the S&P 500 up almost 3.5%. The stock funds in the portfolio largely matched the market’s return in May, with HealthCare Select SPDR the notable underperformer up just 1.55% (after a big run in recent months). Another stinker was T. Rowe Price Japan up just 0.28%. Currently only larger cap Japan stocks are performing well. The real standout was an 8.77% return in the Vanguard Telecom ETF (VOX) – this fund is now up over 43% since added to the portfolio last year. We’re using the outpeformance of these funds as an opportunity to sell. Tech stocks were strong as the Technology SPDR (XLK) saw a 5.06% move.

We are making trades in the Aggressive Growth portfolio, effective June 30th, 2007.

Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Aggressive Growth Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Aggressive Growth Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.

<b>Sales:</b>

• <b>Sell entire</b> Japan allocation: T.Rowe Price Japan (PRJPX) from 5% to 0%

• <b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 20% to 0%

• <b>Reduce</b> large cap blend allocation: Bridgeway Blue-Chip 35 (BRLIX) from 35% to 20%

• <b>Sell entire</b> sector: telecom allocation: Vanguard Telecom Services ETF (VOX) from 5% to 0%

<b>Buys:</b>

• <b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%

• <b>Buy new</b> intermediate term bond allocation: Vanguard Intermediate Term Bond Index (VBIIX) to 20%

• Increase diversified bond allocation: Harbor Bond (HABDX) from 5% to 15%

• <b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 10%

<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.

As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.

We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is worth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.

High yield bonds, international stocks, telecom stocks (and higher yield, value stocks in general) have all outperformered and attracted new money and we want to reduce our stake and focus on investment grade bonds and U.S. growth stocks.

<b>Redemption fee information: </b>

If you sell T.Rowe Price Japan (PRJPX)  within 90 days of purchase, you will get hit with a 2% redemption fee.

There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.