When bubbles mature, investors begin considering even more speculative areas with supposedly more upside, believing "all the money has been made" in the things that have already taken off. This second wave takes what was learned in the bubble, and applies it to an investment with questionable upside, often jolting the price even faster and higher than the original bubble. ...read the rest of this article»

Just when you thought you had your hands full with the current crop of investing fears – muni bond defaults, inflation, double-dip recessions, rising interest rates, the falling dollar, political unrest in the Middle East, rising oil prices, etc. – a new one appears: natural disasters. As we said in our article last month, Wall Street doesn’t see the real dangers coming…and generally doesn’t price in the unknowable risks of investing. ...read the rest of this article»

Although getting between you and your investments continues to deliver spoils in the tens of billions a year to the middle men, from the lowliest broker/salesman to the highest-flying billion(s)-dollar-a-year-plus salaried hedge fund manager, the only thing shrinking is the actual return from owning stocks and bonds, particularly if you follow many of the "experts'" wisdom and guidance. ...read the rest of this article»

The latest debt scare making the rounds: Fear of widespread municipal bond defaults. We’ve all heard again and again the stories of state-government financial problems, so when a well-known doom-and-gloom strategist appears on TV warning about major problems in the municipal debt markets, investors take note and by taking note we mean they sell their municipal bonds. ...read the rest of this 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.” ...read the rest of this 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.  ...read the rest of this 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). ...read the rest of this 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. ...read the rest of this 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. ...read the rest of this article»

June marks the 100th month we’ve published the Powerfund Portfolios newsletter, and to mark the occasion, we’re making some executive changes to our model portfolios. We’ll be reducing the number of model portfolios and (eventually) moving to daily performance updates. ...read the rest of this article»