New User?August 2009 Performance Review
The Conservative Portfolio climbed 1.29% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
In 2008 many top value funds tanked, largely because of exposure to supposedly cheap banks, financials, home builders, and natural resource companies. This year many hard-hit funds that have a value tilt are recovering nicely. Vanguard U.S. Value (VUVLX) has not been in this group, but then the fund didn’t fall more than the S&P 500 last year. In August the fund had a good month, up 4.15%.
Vanguard Telecom Service ETF (VOX) slipped 0.86% as telecom stocks were weak in August as investors continued to pour into what got hit the hardest in 2008. The hot streak of earlier this year has ended. This remains an out-of-favor area with fund investors.
Junk bonds continued to climb and have better year-to-date returns than most stock funds Metropolitan West High Yield Bond (MWHYX) was up 1.72% in August. This category is fast losing appeal to us.
The Aggressive Portfolio rose 1.87% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
Vanguard Pacific Stock ETF (VPL) was up 3.24% in August as Japan stocks have rebounded nicely this year. Japan has been out of favor with fund investors as they tend to focus on more dynamic (and overpriced) emerging markets and countries like China.
July 2009 Performance Review
The Conservative Portfolio jumped 3.02% in July.
A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Vanguard Telecom Service ETF (VOX) barely participated in the recent run in stocks with a mere 2.39% gain in July. This out-of-favor area has not been as appealing as health care but was very hot earlier in the year (and is still up more than the market for 2009). Recent underperformance here is not so much because conservative stocks are lagging, which they are, but over concerns telecom companies are not going to do well in the rebound.
Junk bonds continued to climb, and Metropolitan West High Yield Bond (MWHYX) was up 5.03% last month. We’ll likely cut back our high-yield exposure soon.
The Aggressive Portfolio jumped 5.88% in July.
A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Just when you write off biotech, the sector comes roaring back. July saw our SPDR Biotech (XBI) ETF rise 9.06%. – That’s a 22.02% gain for the last three months, despite weakness in the first part of 2009. In fact the fund is still under the market’s return for the year. SPDR Biotech is now around a half billion in assets, more than when we bought it but still within reasonable asset levels. Biotech has been discovered by some momentum investors, but not the fund buying public at large.
June 2009 Performance Review
The Conservative Portfolio climbed 1.06% in June.
The S&P500 was up just 0.22% in June, taking a breather from the recent sharp rise off the bottom. Tech stocks were much stronger with a 3.42% climb in the Nasdaq. Small cap stocks were up 1.47% while government bonds climbed 0.77% as the rise in interest rates in recent months subsided, probably just in time to prevent more damage to real estate markets.
We used the strength of the last few months to cut back slightly on stocks at the end of June. Specifically, we sold our recent moves into financials and emerging markets, buys we made at the end of February (just days before the market turned around). We feel it’s safer making the easy money by selling these categories now versus sticking around for potential-but-risky future gains . It’s not like we’re particularly light on stocks right now anyway.
As it turns out, our performance so far this year has been even better than our posted performance figures of last month indicated due to a calculation error (returns for XLF and RSX, the financial and Russia ETFs, strong performing ETFs, were left out). All performance numbers have been revised, and all of the Powerfund Portfolios are beating the S&P500 this year. More impressive, the S&P 500 is still down around 26% over the last 12 months, while our worst model portfolio is off just 11.54%. Better still, our stock-heavy Aggressive Growth portfolio, is now up 1.28% over the last 12 months. This was primarily achieved with well-timed shorts on commodities, limited exposure to the hardest hit stock funds, and increased allocations to some solid outperformers.
Health Care Select SPDR (XLV) beat the market with a 2.36% gain as investors’ fears of government involvement in healthcare dropped and the excitement over riskier economically sensitive stocks subsided.
Junk bonds continued to rebound as investors grew increasingly more comfortable with riskier debt. Metropolitan West High Yield Bond (MWHYX) was up 21.58% over the last three months, more than most stock funds and the S&P 500.
Financial Select Sector SPDR (XLF) ended on a flat note with a 1.79% drop in June, though we made 59.55% in the four months we owned the fund.
The Aggressive Portfolio rose 1.53% in June.
The S&P500 was up just 0.22% in June, taking a breather from the recent sharp rise off the bottom. Tech stocks were much stronger with a 3.42% climb in the Nasdaq. Small cap stocks were up 1.47% while government bonds climbed 0.77% as the rise in interest rates in recent months subsided, probably just in time to prevent more damage to real estate markets.
We used the strength of the last few months to cut back slightly on stocks at the end of June. Specifically, we sold our recent moves into financials and emerging markets, buys we made at the end of February (just days before the market turned around). We feel it’s safer making the easy money by selling these categories now versus sticking around for potential-but-risky future gains . It’s not like we’re particularly light on stocks right now anyway.
As it turns out, our performance so far this year has been even better than our posted performance figures of last month indicated due to a calculation error (returns for XLF and RSX, the financial and Russia ETFs, strong performing ETFs, were left out). All performance numbers have been revised, and all of the Powerfund Portfolios are beating the S&P500 this year. More impressive, the S&P 500 is still down around 26% over the last 12 months, while our worst model portfolio is off just 11.54%. Better still, our stock-heavy Aggressive Growth portfolio, is now up 1.28% over the last 12 months. This was primarily achieved with well-timed shorts on commodities, limited exposure to the hardest hit stock funds, and increased allocations to some solid outperformers.
Health Care Select SPDR (XLV) beat the market with a 2.36% gain as investors’ fears of government involvement in healthcare dropped and the excitement over riskier economically sensitive stocks subsided.
Biotech came back with a vengeance in June after some lackluster months - our SPDR Biotech (XBI) ETF climbed 7.88% for the month.
Financial Select Sector SPDR (XLF) ended on a flat note with a 1.79% drop in June, though we made 59.55% in the four months we owned the fund.
June 2009 Trade Alert!
We are making trades in five of our seven Powerfund Portfolios. As longer term subscribers know, we tend to buy stock funds when the market takes a dive, and cut back as the market climbs.
For all but our riskier Daredevil Portfolio, these trades are to cut back slightly on our overall allocation to stocks. Specifically we are getting out of our recent move into financials near the market bottom in March 2009.
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.
For our Daredevil portfolio, we are cutting back on an even hotter fund we bought in March, our Russian ETF RSX, which is up around 80% even despite a recent pullback. We are also making some more significant changes to the portfolio (please read Daredevil trade commentary for more detail).
We're making trades in the Conservative portfolio, effective 6/30/2009:
<b>Sales:</b>
- SELL Financial Select Sector SPDR (XLF) from 5% to 0%
<b>Buys:</b>
- NEW ALLOCATION PIA Short-Term Securities (PIASX) to 5%
We are making trades in five of our seven Powerfund Portfolios. As longer term subscribers know, we tend to buy stock funds when the market takes a dive, and cut back as the market climbs.
For all but our riskier Daredevil Portfolio, these trades are to cut back slightly on our overall allocation to stocks. Specifically we are getting out of our recent move into financials near the market bottom in March 2009.
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.
For our Daredevil portfolio, we are cutting back on an even hotter fund we bought in March, our Russian ETF RSX, which is up around 80% even despite a recent pullback. We are also making some more significant changes to the portfolio (please read Daredevil trade commentary for more detail).
We're making trades in the Aggressive Growth portfolio, effective 6/30/2009:
<b>Sales:</b>
- SELL Financial Select Sector SPDR (XLF) from 5% to 0%
<b>Buys:</b>
- INCREASE Harbor Bond (HABDX) from 5% to 10%
May 2009 Performance Review
The Conservative Portfolio jumped 4.02% in May.
May marked another big month for stocks, putting the S&P 500 in positive territory for the year. Largely because we lost less on the way down and did some buying in March, all of our model portfolios are well ahead of the S&P 500 in 2009, except one, Daredevil.
Even after May’s 5.6% jump in the S&P 500, stocks are still pretty cheap - with a few ifs: if home prices stop falling and if the economy starts to recover in the next few months and if corporate earnings reverse course and head back to all-time highs.
Of course, these are big ifs, and we think (at best) the market is going to take a breather and wait for the “green shoots” to turn into actual plants.
Longer-term government bonds continued to slide as investors started worrying more about inflation and less about not getting paid back at all. Junk bonds enjoyed another positive month as investors focused on the big yields more than the big risks in higher yield bonds.
May shows Bill Gross’ move into higher risk debt is alive and well, with a 3.57% return for the month for Harbor Bond (HABDX). Keep in mind government bonds were down in May, and the total bond market index was flat. We wouldn’t be surprised if he cuts back the risk at some point if this keeps up.
Nakoma Absolute Return (NARFX) turned April’s poor showing around with a 1.38% rise. It will be hard for this fund to take off relative to the market without another drop in the S&P 500, or better, a sharp drop relative to the market in consumer discretionary stocks. We expect such a drop in too-soon-for-a-recovery consumer stocks.
Healthcare stocks did well but were no financials. Health Care Select SPDR (XLV) was up 6.82% in May, slightly ahead of the broader market.
Janus Global Research (JARFX) had another great month. If this keeps up the fund will recover its big losses of last year. For May, the fund was up 9.95% and is now down ‘just’ 31.46% over the last year, only slightly worse than the market. This in itself is remarkable considering the fund is up 36.52% over the last three months – more than any major index. Keep in mind this fund was killing the market before the crash, and apparently is doing so again. This will likely not be a good fund if the market sinks anew.
Junk bonds remain a great recovery play with a sharp 6.58% climb in Metropolitan West High Yield (MWHYX). The great junk bond recovery is moving a little too fast.
The Financial Sector ETF posted another huge month. In May the fund climbed about 14% for a 62.46% return since we bought it just three months ago. Last month we said financial stocks will perform no better than the S&P 500 given the run-up, now we think they will underperform slightly and we are looking to cut back. Only short term momentum is keeping this fund on top.
The Aggressive Portfolio jumped 5.65% in May.
May marked another big month for stocks, putting the S&P 500 in positive territory for the year. Largely because we lost less on the way down and did some buying in March, all of our model portfolios are well ahead of the S&P 500 in 2009, except one, Daredevil.
Even after May’s 5.6% jump in the S&P 500, stocks are still pretty cheap - with a few ifs: if home prices stop falling and if the economy starts to recover in the next few months and if corporate earnings reverse course and head back to all-time highs.
Of course, these are big ifs, and we think (at best) the market is going to take a breather and wait for the “green shoots” to turn into actual plants.
Longer-term government bonds continued to slide as investors started worrying more about inflation and less about not getting paid back at all. Junk bonds enjoyed another positive month as investors focused on the big yields more than the big risks in higher yield bonds.
Nakoma Absolute Return (NARFX) turned April’s poor showing around with a 1.38% rise. It will be hard for this fund to take off relative to the market without another drop in the S&P 500, or better, a sharp drop relative to the market in consumer discretionary stocks. We expect such a drop in too-soon-for-a-recovery consumer stocks.
The Japanese market has been recovering nicely and is outpacing the U.S. market on the way up now. The Nikkei recently broke through 10,000 (don’t hold your breath for the old bubble high near 40,000). Vanguard Pacific Stock ETF (VPL) was up near 12% with a 34% three-month return. We’re actually up since we bought back into Japan seven months ago, which was a little too early.
Healthcare stocks did well but were no financials. Health Care Select SPDR (XLV) was up 6.82% in May, slightly ahead of the broader market.
May shows Bill Gross’ move into higher risk debt is alive and well, with a 3.57% return for the month for Harbor Bond (HABDX). Keep in mind government bonds were down in May, and the total bond market index was flat. We wouldn’t be surprised if he cuts back the risk at some point if this keeps up.
Biotech continues to trail the market. SPDR Biotech (XBI) ETF was up 3.71%. The main benefit here is that if these recently hot stocks turn south again, biotech will likely be one of the only high-risk areas that doesn’t collapse – much like 2008.
Janus Global Research (JARFX) had another great month. If this keeps up the fund will recover its big losses of last year. For May, the fund was up 9.95% and is now down ‘just’ 31.46% over the last year, only slightly worse than the market. This in itself is remarkable considering the fund is up 36.52% over the last three months – more than any major index. Keep in mind this fund was killing the market before the crash, and apparently is doing so again. This will likely not be a good fund if the market sinks anew.
The Financial Sector ETF posted another huge month. In May the fund climbed about 14% for a 62.46% return since we bought it just three months ago. Last month we said financial stocks will perform no better than the S&P 500 given the run-up, now we think they will underperform slightly and we are looking to cut back. Only short term momentum is keeping this fund on top.
April 2009 Performance Commentary
The Conservative Portfolio jumped 4.52% in April.
Up, up, and away. You’d almost forget the economy is, at best, flat, and, at worst, is taking a pause before another plunge. (We’re in the “flat” camp incidentally.) The S&P 500 was up just shy of 10% in April, a 9.56% gain that beat the Dow’s 7.56% for the month. Small-cap stocks led the rise with a 15.46% monthly gain, while the tech-heavy Nasdaq was up a bold 12.46%. Longer-term government bonds continued to collapse off their bubble-like boom and delivered a negative 4.83% return for the month. Of course, if we get an even deeper recession the government-bond boom will likely return.
High-risk investments of all stripes had a good month, including junk bonds. Basically, if an investment had a bad 2008, it had a great April. Investors are hoping the market will do a repeat of the rise after the 2002 market lows.
Our recent move into more beaten-down fare -- like financials and Russia -- has proved timely thus far, but while we intended to hold such picks for over a year, it is likely we will be selling soon if this mini-euphoria keeps up. Our remaining inverse funds had the worst month in our history, proving once again these funds are good as a short term hedges against a collapse in the market and the most overvalued areas, but are terrible longer-term investments. Frankly, we should have sold when the getting was good but wanted the hedge against our increasingly risky portfolios. We may also consider shorting ETFs we don’t like rather than buying ETFs that short – a strategy with more long-term investing merit
Bottom line: The panic is gone from the markets, but we think the economy may have reached a permanently low plateau, to misquote the infamous economist Irving Fisher circa 1929. This is of course much better than panic and collapse.
If you want an idea how much Bill Gross has moved away from ultra safe Treasurys and into corporates, higher yield, and basically the once forlorn, look at April’s returns. Harbor Bond (HABDX) was up 1.86%, compared to a -4.83% return for long term Treasury bonds for the month, and a 0.36% return for a total bond market index. High yield (junk) bonds were up about 11.5% for the month.
Nakoma Absolute Return (NARFX) had a bad month in April with a -3.5% return – not far from this fund’s worst one-month return since we bought it, which was back in January 2008 when it had a 4.25% drop. Incidentally, the last time this fund was hit this hard was during a down month for stocks, which shows the shorts were really not working in April. Specifically, last month the fund mostly lost on shorts (best stocks will decline) in the “consumer discretionary” area, companies like Cheesecake Factory, Buffalo Wild Wings, PF Chang’s China Bistro, Ethan Allen, and the like. Many of these types of stocks rocketed up in April as fears the economy is not in fact on the road to another Depression. Nakoma remains pessimistic about the future.
Health-care stocks did not climb much in this recent move up in stocks. The Health Care Select SPDR (XLV) was down 0.12% in April. To some extent this makes sense because health-care stocks far outperformed the market on the way down (by falling less) and just seem too boring for the big comeback in higher risk stocks. But step back from the relative popularity – with a market value similar to financial stocks right now. Which area is likely to earn more money over the next 5-10 years? The financial sector, which is limping along on government loans and is still nursing a multi-trillion dollar portfolio of bad mortgages? Or the health-care sector, which benefits from an aging population and likely increases in health-care coverage with smaller offsetting hits to income from government actions resulting from the move to a greater role in health care?
Janus Global Research (JARFX) had its best month since we owned it with a 13.67% rise in April – the fund’s second very strong month in a row
Junk bonds proved to be a particularly good place to be as investor sentiment recovered. Metropolitan West High Yield (MWHYX) jumped 10.21% - the highest monthly return since we bought the fund on July 1st 2008.
The Financial Sector ETF was up 21.76% in April as the doom and gloom in banking continued to turn into bottom fishing euphoria. This fund has more than doubled since the market low in early March. While the panic selling a few weeks ago was overdone, which is why we bought this fund in the first place, by mid-May the financial sector has crawled back to being the third largest sector in the S&P 500 (right before energy, nipping at the heels of health care but well after technology stocks). This is too far, too fast. Financial stocks will perform no better than the S&P 500 from these levels.
The Aggressive Portfolio jumped 6.27% in April.
Up, up, and away. You’d almost forget the economy is, at best, flat, and, at worst, is taking a pause before another plunge. (We’re in the “flat” camp incidentally.) The S&P 500 was up just shy of 10% in April, a 9.56% gain that beat the Dow’s 7.56% for the month. Small-cap stocks led the rise with a 15.46% monthly gain, while the tech-heavy Nasdaq was up a bold 12.46%. Longer-term government bonds continued to collapse off their bubble-like boom and delivered a negative 4.83% return for the month. Of course, if we get an even deeper recession the government-bond boom will likely return.
High-risk investments of all stripes had a good month, including junk bonds. Basically, if an investment had a bad 2008, it had a great April. Investors are hoping the market will do a repeat of the rise after the 2002 market lows.
Our recent move into more beaten-down fare -- like financials and Russia -- has proved timely thus far, but while we intended to hold such picks for over a year, it is likely we will be selling soon if this mini-euphoria keeps up. Our remaining inverse funds had the worst month in our history, proving once again these funds are good as a short term hedges against a collapse in the market and the most overvalued areas, but are terrible longer-term investments. Frankly, we should have sold when the getting was good but wanted the hedge against our increasingly risky portfolios. We may also consider shorting ETFs we don’t like rather than buying ETFs that short – a strategy with more long-term investing merit
Bottom line: The panic is gone from the markets, but we think the economy may have reached a permanently low plateau, to misquote the infamous economist Irving Fisher circa 1929. This is of course much better than panic and collapse.
Nakoma Absolute Return (NARFX) had a bad month in April with a -3.5% return – not far from this fund’s worst one-month return since we bought it, which was back in January 2008 when it had a 4.25% drop. Incidentally, the last time this fund was hit this hard was during a down month for stocks, which shows the shorts were really not working in April. Specifically, last month the fund mostly lost on shorts (best stocks will decline) in the “consumer discretionary” area, companies like Cheesecake Factory, Buffalo Wild Wings, PF Chang’s China Bistro, Ethan Allen, and the like. Many of these types of stocks rocketed up in April as fears the economy is not in fact on the road to another Depression. Nakoma remains pessimistic about the future.
Health-care stocks did not climb much in this recent move up in stocks. The Health Care Select SPDR (XLV) was down 0.12% in April. To some extent this makes sense because health-care stocks far outperformed the market on the way down (by falling less) and just seem too boring for the big comeback in higher risk stocks. But step back from the relative popularity – with a market value similar to financial stocks right now. Which area is likely to earn more money over the next 5-10 years? The financial sector, which is limping along on government loans and is still nursing a multi-trillion dollar portfolio of bad mortgages? Or the health-care sector, which benefits from an aging population and likely increases in health-care coverage with smaller offsetting hits to income from government actions resulting from the move to a greater role in health care?
If you want an idea how much Bill Gross has moved away from ultra safe Treasurys and into corporates, higher yield, and basically the once forlorn, look at April’s returns. Harbor Bond (HABDX) was up 1.86%, compared to a -4.83% return for long term Treasury bonds for the month, and a 0.36% return for a total bond market index. High yield (junk) bonds were up about 11.5% for the month.
Biotech did even worse than health care in general, with a -5.68% move in April for our SPDR Biotech (XBI) ETF. The momentum has left this area.
Janus Global Research (JARFX) had its best month since we owned it with a 13.67% rise in April – the fund’s second very strong month in a row
The Financial Sector ETF was up 21.76% in April as the doom and gloom in banking continued to turn into bottom fishing euphoria. This fund has more than doubled since the market low in early March. While the panic selling a few weeks ago was overdone, which is why we bought this fund in the first place, by mid-May the financial sector has crawled back to being the third largest sector in the S&P 500 (right before energy, nipping at the heels of health care but well after technology stocks). This is too far, too fast. Financial stocks will perform no better than the S&P 500 from these levels.
March 2009 Performance Review
The Conservative Portfolio jumped 3.70% in March.
If the last six weeks in the market are any indication, the panic in the financial markets could be behind us. While getting another 25% or more out of stocks may require the economy and housing market to stop sliding, investors seem comfortable that we’ve stepped away from the precipice for now, and that apparently the drop below Dow 7,000 was panic-based. This move could be a dead cat bounce, or a suckers rally, or some other term used on Wall Street by people who incorrectly called the markets direction.
From the low hit in early March through the 17th of April, the Dow is up around 26%, the S&P 500 30%, and the Nasdaq 32%. These are remarkable numbers, but largely because we are down so much a partial move back marks for a large percentage gains. For the month of March the S&P 500 was up 8.76%, slightly better than our growth and aggressive growth portfolios (though we’re still beating the S&P 500 for the year).
One of the drivers of the market’s rebound has been financials. From the early March low, the Financials ETF (XLF) is up about 90%. The good news of course is that we bought said ETF in several of our Powerfund Portfolios. Unfortunately we did our trade five trading days before financials hit bottom, which really is pretty amazing timing - except financials got hit very hard in those first few post trade days in March when it looked like the world was coming to an end. We’re still up about 50% since we added the fund - 17% was the March return, the rest in early April.
Nakoma Absolute Return (NARFX) was the only loser in March (other than inverse ETFs) with a -0.77% return. Anybody with short positions had a tough time these last few weeks.
Healthcare stocks continue to lag this market. Health Care Select SPDR (XLV) was up 6%.
Janus Global Research (JARFX) had a good month with a 9.23% return. When a fund underperforms on the way down, you want to see it beat the market on the way up, like this one did.
If the last six weeks in the market are any indication, the panic in the financial markets could be behind us. While getting another 25% or more out of stocks may require the economy and housing market to stop sliding, investors seem comfortable that we’ve stepped away from the precipice for now, and that apparently the drop below Dow 7,000 was panic-based. This move could be a dead cat bounce, or a suckers rally, or some other term used on Wall Street by people who incorrectly called the markets direction.
From the low hit in early March through the 17th of April, the Dow is up around 26%, the S&P 500 30%, and the Nasdaq 32%. These are remarkable numbers, but largely because we are down so much a partial move back marks for a large percentage gains. For the month of March the S&P 500 was up 8.76%, slightly better than our growth and aggressive growth portfolios (though we’re still beating the S&P 500 for the year).
One of the drivers of the market’s rebound has been financials. From the early March low, the Financials ETF (XLF) is up about 90%. The good news of course is that we bought said ETF in several of our Powerfund Portfolios. Unfortunately we did our trade five trading days before financials hit bottom, which really is pretty amazing timing - except financials got hit very hard in those first few post trade days in March when it looked like the world was coming to an end. We’re still up about 50% since we added the fund - 17% was the March return, the rest in early April.
Nakoma Absolute Return (NARFX) was the only loser in March (other than inverse ETFs) with a -0.77% return. Anybody with short positions had a tough time these last few weeks.
Vanguard Pacific Stock ETF (VPL) was up 9.91% in March as some hard-hit foreign markets rebounded even more than the U.S. market. We increased our stake in this fund at the beginning of the March.
Bridgeway Blue-Chip 35 (BRLIX ) posted another good month with a 9.15% jump.
Healthcare stocks continue to lag this market. Health Care Select SPDR (XLV) was up 6%.
Technology stocks have been particularly strong recently. One possible explanation is that many tech companies – Intel, Microsoft, Cisco, etc – are sitting on mountains of cash and no debt, making them particularly attractive in a crisis where highly leveraged companies can fail. Imagine that…in this bear market the losers of the last bear market are the attractive stocks. Maybe in our next bear market we should load up on emerging markets and commodities stocks. For the month our Technology ETF (XLK) was up 11.17%.
The great biotech streak may be winding down, though we hesitate to bail out too early as Wall Street has a way of way overdoing a good thing. SPDR Biotech (XBI) was up an uneventful 4.04% in March.
Janus Global Research (JARFX) had a good month with a 9.23% return. When a fund underperforms on the way down, you want to see it beat the market on the way up, like this one did.
February 2009 Performance review
The Conservative Portfolio dropped -1.88% in February.
The stock death spiral continues with double-digit declines in most major indexes in February. The Dow was down 10.66%, the S&P 500 lost 10.65% (for the worst February return since 1933), and the small cap Russell 2000 fell 12.15%. Foreign stocks dropped by about the same magnitude (or rather craptitute…) The tech heavy (and bank-lite) Nasdaq was down a mere 6.68%. Bonds were near flat with the aggregate bond index down 0.38%. Not helping matters was the U.S. Government, which of late appears to be reducing confidence and adding confusion and uncertainty. Investors are starting to realize the current problem doesn’t fix easy.
Our ‘downside participation’ compared to the S&P 500 is increasing, particularly with our recent trade placed at the end of February. In February our model portfolios ranged in downside from -0.84% to -8.74%, with an average return of -5.33%. Our more aggressive portfolios should now fall from about 75%-100% of the S&P 500’s drop each month. Of course, our model portfolios are not down as much as the market’s 18.18% drop this year so far, which means we are pretty confident 2009 will be another market beating year for us.
Speaking of fund investors, they added a few billion in January, just in time to lose a good chunk of change. During the first week of March they bailed out of stock funds to the tune of $20 billion in a week (clearly not MAXadvisor subscribers…). Those are the kind of redemption numbers we like to see to get confident on stocks. Perhaps the market’s recent dramatic turnaround happened just to spite the sellers and prove the market is a can’t-win game more akin to a casino than a long-term investment strategy. We’re watching to see if this rebound brought money back in, because we’d really like to see more money leave regardless of short-term market direction. This would indicate that fund investors are throwing in the towel on investing, a distinct possibility given the market’s performance and growing bad taste for Wall Street as a business.
Nakoma Absolute Return (NARFX) again beat the market with a 1.92% drop. Still, this fund is not making money in this down market. This is acceptable so long as the fund makes money in up markets or we might as well just own a money market fund – the benchmark most long short funds never seem to beat. This fund is about the best in this often terrible fund category with a 15.10% return in 2007.
Bridgeway Balanced (BRBPX) had a great month relative to the market with a 2.34% return. Last year the fund underperformed Gateway (GATEX) by a wide margin but this year the fund is leaving GATEX in the dust.
Healthcare stocks took a dive largely on fears the new administration is going to damage profitability in the business. Specifically, when President Obama unveiled his budget in late February healthcare stocks tanked, notably insurers and drug companies. In addition, the earnings of healthcare companies don’t appear to be as ‘recession proof’ as many hoped (us included) either. As it turns out, people cut back on medical consumption – not as much as say jet skis and eating at Cheesecake Factory, but more than Wall Street anticipated. Health Care Select SPDR (XLV) was down 12.39% for the month.
Janus Global Research (JARFX) clocked in another market beating month with a 6.94% drop. One thing you have to say about his fund, it’s not a closet indexer.
The Aggressive Portfolio fell -6.55% in February.
The stock death spiral continues with double-digit declines in most major indexes in February. The Dow was down 10.66%, the S&P 500 lost 10.65% (for the worst February return since 1933), and the small cap Russell 2000 fell 12.15%. Foreign stocks dropped by about the same magnitude (or rather craptitute…) The tech heavy (and bank-lite) Nasdaq was down a mere 6.68%. Bonds were near flat with the aggregate bond index down 0.38%. Not helping matters was the U.S. Government, which of late appears to be reducing confidence and adding confusion and uncertainty. Investors are starting to realize the current problem doesn’t fix easy.
Our ‘downside participation’ compared to the S&P 500 is increasing, particularly with our recent trade placed at the end of February. In February our model portfolios ranged in downside from -0.84% to -8.74%, with an average return of -5.33%. Our more aggressive portfolios should now fall from about 75%-100% of the S&P 500’s drop each month. Of course, our model portfolios are not down as much as the market’s 18.18% drop this year so far, which means we are pretty confident 2009 will be another market beating year for us.
Speaking of fund investors, they added a few billion in January, just in time to lose a good chunk of change. During the first week of March they bailed out of stock funds to the tune of $20 billion in a week (clearly not MAXadvisor subscribers…). Those are the kind of redemption numbers we like to see to get confident on stocks. Perhaps the market’s recent dramatic turnaround happened just to spite the sellers and prove the market is a can’t-win game more akin to a casino than a long-term investment strategy. We’re watching to see if this rebound brought money back in, because we’d really like to see more money leave regardless of short-term market direction. This would indicate that fund investors are throwing in the towel on investing, a distinct possibility given the market’s performance and growing bad taste for Wall Street as a business.
Nakoma Absolute Return (NARFX) again beat the market with a 1.92% drop. Still, this fund is not making money in this down market. This is acceptable so long as the fund makes money in up markets or we might as well just own a money market fund – the benchmark most long short funds never seem to beat. This fund is about the best in this often terrible fund category with a 15.10% return in 2007.
Bridgeway Blue-Chip 35 (BRLIX ) had a better return relative to the market in February than January’s dismal showing, with an 8.2% drop for the month.
Healthcare stocks took a dive largely on fears the new administration is going to damage profitability in the business. Specifically, when President Obama unveiled his budget in late February healthcare stocks tanked, notably insurers and drug companies. In addition, the earnings of healthcare companies don’t appear to be as ‘recession proof’ as many hoped (us included) either. As it turns out, people cut back on medical consumption – not as much as say jet skis and eating at Cheesecake Factory, but more than Wall Street anticipated. Health Care Select SPDR (XLV) was down 12.39% for the month.
Biotech stocks have been about the best part of the stock market for most of the 50% drop in stocks. SPDR S&P Biotech (XBI) delivered some bad performance with a 12.30% drop in February, taking the one year return to negative 12.95% and the since added return (we bought in late 2006) return down to -7.49%. This of course is far better than the stock market in general.
Janus Global Research (JARFX) clocked in another market beating month with a 6.94% drop. One thing you have to say about his fund, it’s not a closet indexer.
In our last month’s portfolio commentary we said we’d be cutting back on hot PowerShares DB Commodity Double Short ETN (DEE), and we sold it completely at the end of February after an 11.55% one month return. Double inverse ETFs and ETNs are a tricky game, but this one really worked out for us. We bought the fund at the end of June in 2008 near the top of the commodity bubble. With this sale, we booked a 389% return in less than a year, enough to take up some of the pain in all the stock fund declines. We’ve had some quick triple-digit returns in funds in our model portfolios before (206% return in SSgA Emerging Markets SSEMX and 194% in Artisan International Small Cap ARTJX) but nothing this high or this fast.
We noted we were going to sell Western Asset Managed High Income Fund (MHY) soon because of the rising market price relative to underlying fund value. We sold at the end of February, but unfortunately the fund’s negative 16% return for the month removed all of our profits leaving us with a -3.11% return since added. Considering we bought the fund at the end of October 2008, relative to the stock market and even other junk bond funds this is return wasn’t bad – though not the double-digit positive return we were showing last month.
February 2009 Trade Alert!
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.
This is our third trade in less than a year – very active for us. We tend to buy as prices fall, and, well, let’s just say the market made us do it.
With these trades our portfolios have been getting more aggressive across the board. So far our downside has been significantly less than the S&P 500 even during two very bad years for stocks – 2002 and 2008. We feel these moves will allow us to beat the S&P 500 on the way down AND the eventual way back up, much like they have through these portfolios history (although with increased risk our portfolios could fall almost as much or perhaps even more than the market in major down moves). We have more ideas if the market truly erodes to depression era levels – say Dow 5,000. At that point we may go ‘all in’ and make significant risk increases in our lower risk portfolios because frankly, at Dow 5,000 stocks just aren’t that risky. While a move to 5,000 is unlikely, it is possible, and we’ll have more to say on this in our next newsletter.
<b>Selling</b>
BlackRock MuniAssets Fund (MUA) now trades at a premium to NAV as investors have flocked back into muni bonds and closed end funds due to ebbing fears of state defaults and massive government handouts to troubled states. One benefit of buying a closed end fund at a discount is the opportunity to make double whammy profits of price improvement in the fund’s holdings and a reduction in the gap between market price and NAV. This fund has a higher price then when we bought it – particularly for those that bought right when our alert went out – and has paid a healthy tax free dividend along the way far in excess of current low CD or money market returns. Lately the fund has been very hot, with a roughly 10% return in February alone. There is no point owning closed end funds at premiums to NAV.
<b>Buying</b>
Financial Select Sector SPDR (XLF) captures the down and out financial services industry and has taken a licking, but hasn’t kept on ticking. Companies in this index are becoming wards of the state. We were worried about financial services in general a few years ago as the whole business of financing became too big a piece of the economy. Something had to give, and it has. We don’t think all the companies in this index are going to go belly up – though we think about half will effectively wipe out shareholders (which is ok if the rest triple over the next few years). Currently financial services are less than 10% of the S&P 500 by market cap and we think it is unlikely that percentage will go below 5% - a level where we would add more here and build up our allocation to financial services companies. This index is down about 80% from the high and could hit 90%. Like the Nasdaq in 2002, these are levels worth stepping in.
We’re adding to our Harbor Bond (HABDX) and Nakoma Absolute Return (NARFX) positions for their relative safety until even better opportunities arise.
AGGRESSIVE
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.
This is our third trade in less than a year – very active for us. We tend to buy as prices fall, and, well, let’s just say the market made us do it.
With these trades our portfolios have been getting more aggressive across the board. So far our downside has been significantly less than the S&P 500 even during two very bad years for stocks – 2002 and 2008. We feel these moves will allow us to beat the S&P 500 on the way down AND the eventual way back up, much like they have through these portfolios history (although with increased risk our portfolios could fall almost as much or perhaps even more than the market in major down moves). We have more ideas if the market truly erodes to depression era levels – say Dow 5,000. At that point we may go ‘all in’ and make significant risk increases in our lower risk portfolios because frankly, at Dow 5,000 stocks just aren’t that risky. While a move to 5,000 is unlikely, it is possible, and we’ll have more to say on this in our next newsletter.
<b>Selling</b>
PowerShares DB Commodity Double Short ETN (DEE) is now officially the highest performing fund in the history of the Powerfund Portfolios, recently it delivered around a 400% return in less than a year. Unlike other inverse ETFs, this one worked for us. Though our ideas with the other shorts – real estate and emerging markets- where dead on, the ETFs were a big letdown.
Western Asset Managed High Income Fund (MHY) essentially doubled within a few days of our trade, which created a dangerous situation for new investors (we noted new investors should buy an alternate). The fund has settled down but is still at a premium to NAV and it is time for everybody to move on. We’ll miss the double digit yield but will surely find other beaten down junk bond funds in this environment. Junk bonds haven’t even done well since this trade (as investors in our open end junk bond funds can attest) but the compression in the deep discount has made this position profitable.
<b>Buying</b>
We’re adding to Japan through Vanguard Pacific Stock ETF (VPL) in a similar fashion to what we did in 2002 when Japan was falling hard (we eventually sold out after gains and intend to again here.
January 2009 Performance Review
The Conservative Portfolio climbed 1.27% in January.
2009 is starting off even worse than 2008. In January, the S&P 500 fell by 8.41%, with a similar drop in the Dow of 8.65%. Small cap stocks fared even worse with an 11.12% slide in the Russell 2000 Index, which measures smaller cap stocks. Even the mighty long-term government bond slid a sharp 8.5%, ending last year’s meteoric run. Tech stocks were relatively strong with a 6.3% drop in the Nasdaq and a mild 2.29% drop in the larger cap-oriented Nasdaq 100.
Foreign stocks fared slightly worse than U.S, indexes though some emerging markets were relatively strong after a big beating in 2008. The real trouble was (once again) in financials, notably banks, where the typical bank stock was down some 30% for the month. REITs, or real estate investment trusts, where down almost 20% in January as well, as the real estate bubble just keeps on deflating, wiping out all leveraged players in its wake.
Government spending and support of the collapsing economy has gone into overdrive and can now only be measured in the trillions. Apparently we will find out once and for all if a depression can be prevented by massive government spending. Many major banks’ futures are uncertain at best. Without bailout money, most of the top ten banks would surely have already failed. Why all these bankers didn’t see the trouble brewing in real estate remains a mystery. Surely some deserve to lose their banks, and their jobs. One problem is that for every $1 in government spending the fear factor of an economy in peril is causing perhaps another $1 to not get spent as consumers panic about the future. Investors are just as scared; favoring cash over stocks at levels we’ve never seen. We’d like to see one more large drop and will consider shifting more to stocks on it.
On the positive note, our average portfolio was down 2.39% or less than half the S&P 500’s drop in January 2009…
Nakoma Absolute Return (NARFX) delivered a positive return of 1.5% in a bad month for stocks, a nice showing and more of what we want to see. While we were glad this fund didn’t tank like 95% of the other funds out there, we still weren’t that impressed with the -4.34% return in 2008 – though this return beats almost all stock funds and some bond funds in 2008.
Janus Global Research (JARFX) had another good month relative to the market with a 6.27% drop, helping make up for a bad return during the market’s worst months last year.
https://maxadvisor.com/mt/mt.cgi?__mode=view&_type=entry&id=791&blog_id=14
Commentary
The Conservative Portfolio climbed 1.27% in January.
2009 is starting off even worse than 2008. In January, the S&P 500 fell by 8.41%, with a similar drop in the Dow of 8.65%. Small cap stocks fared even worse with an 11.12% slide in the Russell 2000 Index, which measures smaller cap stocks. Even the mighty long-term government bond slid a sharp 8.5%, ending last year’s meteoric run. Tech stocks were relatively strong with a 6.3% drop in the Nasdaq and a mild 2.29% drop in the larger cap-oriented Nasdaq 100.
Foreign stocks fared slightly worse than U.S, indexes though some emerging markets were relatively strong after a big beating in 2008. The real trouble was (once again) in financials, notably banks, where the typical bank stock was down some 30% for the month. REITs, or real estate investment trusts, where down almost 20% in January as well, as the real estate bubble just keeps on deflating, wiping out all leveraged players in its wake.
Government spending and support of the collapsing economy has gone into overdrive and can now only be measured in the trillions. Apparently we will find out once and for all if a depression can be prevented by massive government spending. Many major banks’ futures are uncertain at best. Without bailout money, most of the top ten banks would surely have already failed. Why all these bankers didn’t see the trouble brewing in real estate remains a mystery. Surely some deserve to lose their banks, and their jobs. One problem is that for every $1 in government spending the fear factor of an economy in peril is causing perhaps another $1 to not get spent as consumers panic about the future. Investors are just as scared; favoring cash over stocks at levels we’ve never seen. We’d like to see one more large drop and will consider shifting more to stocks on it.
On the positive note, our average portfolio was down 2.39% or less than half the S&P 500’s drop in January 2009…
Nakoma Absolute Return (NARFX) delivered a positive return of 1.5% in a bad month for stocks, a nice showing and more of what we want to see. While we were glad this fund didn’t tank like 95% of the other funds out there, we still weren’t that impressed with the -4.34% return in 2008 – though this return beats almost all stock funds and some bond funds in 2008.
Janus Global Research (JARFX) had another good month relative to the market with a 6.27% drop, helping make up for a bad return during the market’s worst months last year.
https://maxadvisor.com/mt/mt.cgi?__mode=view&_type=entry&id=791&blog_id=14
September 2009 Performance Review
The Conservative Portfolio jumped 2.65% in September.
The rebound continues. How time flies. It almost seems like years ago – not a mere six months – that the financial world was crashing down around us. If this continues we’ll be setting new records in how quickly bad times can be fixed by merely reinflating new bubbles. The real estate bubble took a few years to pull us out of the tech bubble / Nasdaq crash.
Speaking of the Nasdaq, tech stocks continued to perform well with the tech heavy index delivering a solid 5.64% gains in September. The Dow’s 2.44% return and S&P 500’s 3.73% gain seem ordinary by comparison. Our model portfolios ranged from 2.05% to 4.07% for the month.
Interest rates went back down, pushing longer term government bonds up just over 2% for the month. While the total bond market gained around 1%, junk bonds remained where the action was as investors piled into riskier debt.
Bill Gross beat the bond market with a 1.59% return in the Harbor Bond fund (HABDX) as he is likely taking a little more risk than the market as a whole right now. We would not be surprised to see him cut back on some of the riskier debt.
Healthcare stocks slowed last month with a mere 0.62% gain for HealthCare Select SPDR (XLV), which is still slightly better than the loss we saw in biotech stocks last month.
Vanguard Telecom Service ETF (VOX) reversed the recent weak course with a sharp move up. The ETF jumped 8.10% in September.
Junk bonds continued to rise once again, beating most stocks. Metropolitan West High Yield Bond (MWHYX) was up 4.76% in September. This category is fast losing appeal to us. To give you an idea how irrational this recent move up has been, we bought this fund in some of our portfolios in the summer of 2008 before the really sharp crash in junk bonds and the fund is up 16.19% since that date (and up far more since the bottom).
The Aggressive Portfolio jumped 3.07% in September.
The rebound continues. How time flies. It almost seems like years ago – not a mere six months – that the financial world was crashing down around us. If this continues we’ll be setting new records in how quickly bad times can be fixed by merely reinflating new bubbles. The real estate bubble took a few years to pull us out of the tech bubble / Nasdaq crash.
Speaking of the Nasdaq, tech stocks continued to perform well with the tech heavy index delivering a solid 5.64% gains in September. The Dow’s 2.44% return and S&P 500’s 3.73% gain seem ordinary by comparison. Our model portfolios ranged from 2.05% to 4.07% for the month.
Interest rates went back down, pushing longer term government bonds up just over 2% for the month. While the total bond market gained around 1%, junk bonds remained where the action was as investors piled into riskier debt.
Healthcare stocks slowed last month with a mere 0.62% gain for HealthCare Select SPDR (XLV), which is still slightly better than the loss we saw in biotech stocks last month.
Bill Gross beat the bond market with a 1.59% return in the Harbor Bond fund (HABDX) as he is likely taking a little more risk than the market as a whole right now. We would not be surprised to see him cut back on some of the riskier debt.