Now that most funds have released year-end capital gains estimates and record dates, we have been able to create our <a href="http://maxadvisor.com/newsletter/reports/MAX.2006.distribution.pdf">annual year-end tax report</a> for all the funds in our model portfolios. Please download the PDF for estimates (and dates) of the distributions. Also, check out our guide to year-end tax issues for advice, tips, and tricks related to year end fund distributions. ...read the rest of this article»

Small cap stocks are now noticeably lagging these larger-cap-weighted indexes. The Russell 2000 index of smaller cap stocks gained just 0.83% in September, and is up just 0.44% over the last three months. Foreign stocks have been flat recently as well. ...read the rest of this article»

August was a surprisingly good month on Wall Street. A solid chunk of the losses incurred in the stock market from earlier in the year was erased. Factor in gains posted so far in September and the media is once again back to reminding us how close we are to an all time high in the Dow. Interest rates continued lower, and are now almost back to where they were before the big scary move up in rates started – the one that spelled housing market crash from rising mortgage rates. Now we’re back to worrying about why longer term rates are so much lower than short term rates – one warning sign of a possible looming recession.  ...read the rest of this article»

In July, safer investments performed better than more speculative ones. The Dow was up 0.45%, the S&P500 gained 0.62%, and the S&P100 – the largest stocks from the S&P500 - rose a solid 1.7%. The Russell 2000 small cap index was down 3.25%, while the Nasdaq fell 3.71%. Larger cap foreign stocks more or less stabilized and moved up with the U.S. market, but smaller cap foreign stocks had some trouble. Bonds gained as interest rates headed downward – so much for the big interest rate increase. The Vanguard Total Bond Index was up 1.35% for the month. ...read the rest of this article»

June started out a little rocky but recovered somewhat as the month progressed. The S&P500 was up just .14% while the Dow was essentially flat (down .05%). Tech was a touch weaker, with the Nasdaq off .31% in June. ...read the rest of this article»

Bonds took another dive in April – a move that appears to be continuing into May. Long term U.S. government treasury bonds – the most interest sensitive bonds – fell nearly 2% in April, after a 3% drop in March. Bonds are down just over 5% for the year, and now have a three year average return below 3% (or only slightly above what you would have received in a good money market fund over the same period). ...read the rest of this article»

Bonds took a dive in March. The roughly 3.5% hit to long-term treasury bonds was the worst hit to bonds since April 2004. The Federal Reserve’s rate-increasing campaign to fight inflation (inflation they may have created) finally caught up with longer-term bonds. ...read the rest of this article»

Bonds took a dive in March. The roughly 3.5% hit to long-term treasury bonds was the worst hit to bonds since April 2004. The Federal Reserve’s rate-increasing campaign to fight inflation (inflation they may have created) finally caught up with longer-term bonds.

Stocks had a good month, with the S&P500 up 1.24%. More speculative stocks outperformed the big caps that dominate the S&P500 and the Dow – a reversal of recent months. The Nasdaq was up 2.56% while the small-cap Russell 2000 Index was up 4.85% – taking small-cap stocks to all time highs, a fairly stretched valuation compared to larger-cap stocks.

Our Conservative portfolio was up 0.22%. With a rough month for bonds, we’re glad to see a positive return. 

The real action came from our new stake in Vanguard Telecom VIPER (VOX), which is also in our Hotsheet for 2006. The ETF (exchange traded fund) was up 4.78% for the month, and up near 15% for the first three months of the year. Investors are becoming wise to the relatively low valuations and high dividends of out-of-favor (at least compared to the rest of the market) telecom stocks. On the one hand, rising interest rates are a threat to any investment bought for yield – who needs a 2% dividend when you can get, say, 6% in government bonds? However, if inflation fears drive interest rates higher, telecom giants are decent inflation picks because the companies have mountains of debt, and debtors generally like inflation. It’s worth noting the American Century Utility fund, which we sold at the end of February, was down 1.51% in March.

SSgA International Growth (SINGX) was no slouch, up 3.5% for the month riding the continuing strength in international stock markets. Too bad we only had 5% in this fund and 5% in the telecom fund. But then, it is a conservative portfolio. International markets keep attracting so much new money that we’re getting quite negative. We’ve had this fund less than a year and it’s up 28% already.

Bill Gross has been moving into longer-term bonds, apparently confident the economy is on the brink of slipping, which will lead to lower interest rates. The Harbor Bond fund (HABDX) was down 1.1% for the month – slightly worse than the 0.98% hit to the total bond market, meaning Gross is likely taking some duration risk here (owning longer maturity bonds than the benchmark).

Short-term bonds were largely flat, with yield making up for the slight decline in prices. Vanguard Short Term Investment Grade (VFSTX) was up just 0.07% in March.

High-yield (junk) bonds were strong compared to investment-grade bonds. Apparently investors are becoming more confident in corporate America’s ability to pay back debt – given that corporate profit margins are at multi-decade highs, it’s not a half bad assumption. Furthermore, if inflation kicks up, companies with lots of debt may benefit; their existing debt load will become easier to payoff as their revenues inflate with everything else. Vanguard High Yield Corporate (VWEHX) was essentially flat for the month. 

Healthcare stocks slipped – HealthCare Select SPDR (XLV) fell 1.23%, reversing previous strength compared to the broader market.

Bonds took a dive in March. The roughly 3.5% hit to long-term treasury bonds was the worst hit to bonds since April 2004. The Federal Reserve’s rate-increasing campaign to fight inflation (inflation they may have created) finally caught up with longer-term bonds.

Stocks had a good month, with the S&P500 up 1.24%. More speculative stocks outperformed the big caps that dominate the S&P500 and the Dow – a reversal of recent months. The Nasdaq was up 2.56% while the small-cap Russell 2000 Index was up 4.85% – taking small-cap stocks to all time highs, a fairly stretched valuation compared to larger-cap stocks.

Our Aggressive Growth portfolio was up 1.59%. The strong stock funds made up for the weakness in bonds. 

The real action came from our new stake in Vanguard Telecom VIPER (VOX), which is also in our Hotsheet for 2006. The ETF (exchange traded fund) was up 4.78% for the month, and up near 15% for the first three months of the year. Investors are becoming wise to the relatively low valuations and high dividends of out-of-favor (at least compared to the rest of the market) telecom stocks. On the one hand, rising interest rates are a threat to any investment bought for yield – who needs a 2% dividend when you can get, say, 6% in government bonds? However, if inflation fears drive interest rates higher, telecom giants are decent inflation picks because the companies have mountains of debt, and debtors generally like inflation.

If international markets keep attracting so much new money, we’re going to have to cut our stakes further. T. Rowe Price Japan was up 4.16% for the month, Artisan International Small Cap (ARTJX) was up 5.15%.

Short-term bonds were largely flat, with yield making up for the slight decline in prices. Vanguard Short Term Investment Grade (VFSTX) was up just 0.07% in March.

Healthcare stocks slipped – HealthCare Select SPDR (XLV) fell 1.23%, reversing previous strength compared to the broader market.

Bill Gross has been moving into longer-term bonds, apparently confident the economy is on the brink of slipping, which will lead to lower interest rates. The Harbor Bond fund (HABDX) was down 1.1% for the month – slightly worse than the 0.98% hit to the total bond market, meaning Gross is likely taking some duration risk here (owning longer maturity bonds than the benchmark).

Interest rates were down in February, helping bond fund returns. Longer term bonds gained 0.77% for the month, while Vanguard Total Bond Index (which owns all types of investment grade U.S. bonds) rose 0.37%. ...read the rest of this article»

The Conservative portfolio put in a decent 4.14% showing in '05 – about half of 2004’s 9.35% return, but then the stock market returned more than twice as much in 2004 as well.  ...read the rest of this article»