What's New

The Most Sidestepped Bubble in History

12/17/10 - Powerfund Portfolios Feature Article

You know it’s bad when the fund companies warn you about dismal future returns in the bond market. Yet there it is – splashed on the home page of Vanguard’s personal investors site – "Vanguard’s Investment Chief Cautions Bond Investors” – a road sign that says “RISK AHEAD.”

November 2010 Performance Review

12/03/10 - Powerfund Portfolios Performance Review

As longer term followers of our portfolios know, we review the year-end tax distribution estimates for our funds around this time to aid in any year-end tax planning. In the case of large year-end distribution, it can make sense to hold off buying a fund until the distribution is paid, particularly with high tax rate short term capital gains. Sometimes it can make sense to sell before the distribution and buy a different fund.

Don’t Be a Hater

11/17/10 - Powerfund Portfolios Feature Article

The mutual fund flow data we study shows $30 billion potentially exiting U.S. stock funds in 2010 – in addition to outflows in 2007, 2008, and 2009. What makes this 2010 flow information surprising, is that it happened in a year in which stocks have not dropped significantly – unlike previous years.

October 2010 Performance Review

11/02/10 - Powerfund Portfolios Performance Review

The current rise in riskier assets may be caused by professional investors trying to get ahead of the next asset bubble. While investors with their own money are avoiding stock funds after a decade-plus of go-nowhere performance, minimal dividends, and major dips, pros who have the luxury of investing other people’s money are starting to focus on the asset bubbles created over the last 15 or so years, in part by Federal Reserve policies.

2:45 To Doom-a

10/17/10 - Powerfund Portfolios Feature Article

The stock and bond market have been strong lately, boosting returns of the funds in both Powerfund portfolios. If bonds were sinking and rates were climbing, we’d likely be shifting money from stocks to bonds at this time. In most cases, stocks, even at these levels, are still a better deal than bonds (although stocks remain the riskier asset class, bond bubble or no bond bubble).

September 2010 Performance Review

10/01/10 - Powerfund Portfolios Performance Review

The strongest stock categories in September where technology funds, which gained 13%, and small cap growth, up 12.8%. Japan, utilities, and real estate posted more modest gains, up 7%, 4.7%, and 4.4% respectively. Strong bond areas included emerging market bond funds, up 3.2% and high yield (junk) bonds, up 2.9%.

Now with Real Money

09/15/10 - Powerfund Portfolios Feature Article

On June 30th, we made a series of trades in the Powerfund Portfolios. These trades were a bit different than the ones we've made since we launched our model portfolios on April 1, 2002. We bought these funds with real money. There are real benefits to using real money to build and follow our portfolios. In order to understand the differences, we need to review how we handled things for the first eight years.

August 2010 Performance Review

09/04/10 - Powerfund Portfolios Performance Review

In August our Conservative portfolio was down -0.8% while our Aggressive portfolio was down 1.8%. Stocks sank last month and bonds were strong once again. The S&P 500 index fund was down 4.53% while the total bond market index fund was up 1.61%. Smaller cap stocks were hit hard, down 7.4%. The Nasdaq was in equally hot water, off about 6.2%. This took most stock mutual funds down more than the S&P 500 as the S&P 500 tends to be larger cap oriented than most funds.

July 2010 Performance Review

08/17/10 - Powerfund Portfolios Performance Review

Most major indexes were up almost exactly as much as the S&P 500; the Nasdaq delivered a 6.9% uptick and the smaller cap Russell 2000 gained 6.87%. Foreign stocks got a double boost from a falling US dollar and rebound in stocks, some from a sharper drop on the way down (best illustrated by our new Vanguard European ETF, which climbed 14.18% for the month).

Bye-Bye Bonds?

08/05/10 - Powerfund Portfolios Feature Article

Big money has been moving into bond funds over the last year or so. We saw a similar situation in the late 1990s, with massive flows into stock funds. Broadly speaking, this trend might lead us to favor stocks over bonds for the next few years, since we generally avoid whatever attracts fund investors. But there's a little more to this money flow than meets the eye.