We executed a trade in both the Conservative and Aggressive Powerfund Portfolios on August 15th, 2013. 

The June Swoon proved temporary as stocks rebounded to new highs in July. Even previously lackluster foreign stocks joined the party as both U.S. and foreign larger stocks rose just over 5%. Emerging market stocks weren’t in a festive mood though – they continued to underperform returning less than 1% in July. Bonds were mostly flat after sliding in recent months.

Almost all yield-oriented foreign investments were already sliding, and U.S. stocks finally got caught up in the downdraft. The S&P 500 fell 1.35%, although the drop in the index was better than the average returns in essentially all categories of funds except short term bonds and small cap growth, including many of our own holdings. It was a bad month to be diversified.

Interest rates jumped, creating fears the end of falling rates is finally here. This took the entire bond market down almost 2% with a bit more damage to longer-term bonds (notably government bonds) which dropped almost 7%. High yield bonds, which are sensitive to interest rates but also to rising stocks and an improving economy, were down around a half percent.