This bull market is getting a little long in the tooth.

In January, even with some weakness near the end of the month (a slide that accelerated into February), the S&P 500 was up almost 6%, with dividends. It seems like nothing can go wrong — the economy is heating up and corporate after-tax profits are destined to climb with the recent corporate tax cut.

Our Conservative portfolio gained 0.61% in Januaray. Our Aggressive portfolio was up 2.75%. Benchmark Vanguard funds for January 2018 were as follows: Vanguard 500 Index Fund (VFINX) up 5.71%; Vanguard Total Bond Market Index Fund (VBMFX) down 1.10%; Vanguard Developed Markets Index Fund (VTMGX) up 4.86%; Vanguard Emerging Markets Stock Index (VEIEX) up 8.39%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, gained 3.54%.

Unfortunately just as it it's always darkest before the dawn, things can look their brightest before a fall. Too much of a good thing is the main worry right now. We cut taxes into an already heating up economy which will lead to more inflation which will cause the federal reserve to raise rates higher than they would with no tax cuts. This means higher mortgage and other financing rates — and if those go high enough we could be looking at another recession.

The strongest areas last month were Latin stocks up about 12% (and the only double-digit gaining category in January) followed closely by China and emerging market stocks, both up in the 7%-9% range.

Foreign stocks in general beat U.S. equites and larger-cap growth stocks in the U.S. were the strongest area domestically, up a stunning 7.4% in January. Larger-cap growth stocks have now beat smaller value by a fairly wide margin of about five percentage points a year over the last five years and are no longer the great relative bargain they once were.

The only double-digit performers in the models where iShares MSCI BRIC Index (BKF) and iShares MSCI Italy Capped (EWI), up 12.45% and 10.97% respectively. All other holdings else was more or less on par with the market, except for interest rate sensitive funds like Vanguard Utilities (VPU) and Vanguard Telecom Services ETF (VOX) down 3.13% and up 1.14% respectively.

With all boats rising, shorting anything was a bomb.

On the bond side, junk bonds and foreign unhedged bonds did well as our dollar slid again. Our other bond funds suffered with rising rates.

The problem with the very recent stock slide that isn't fully reflected in January numbers is that interest rates are rising and are sending bonds down as well — in fact the rates started going up before stocks went down. Right now, essentially everything is dropping and even balanced portfolios are taking hits. This means bond funds are falling as are safer yield-oriented stocks like telecom and utilities. That said, we're down less than the indexes and the Vanguard Star fund — which should be expected as we were lagging during this sharp run up.

Investor exuberance is becoming irrational.

It doesn't seem like what you would want to do in the face of dead-end bonds and fast rising equities globally (not to mention the increasing likelihood of corporate tax cuts), but we may have to take the portfolio's risk levels down a bit soon. Hopefully a risk reduction will be contrarian and not stupid…but the two often walk hand-in-hand.

While we don't (necessarily) think a 2000 or 2007 grade stock meltdown is in the cards, upside potential is looking smaller than downside potential. This would mean a move to lower-risk stock funds and even less credit risk on our bond side.

The Conservative portfolio gained 1.19% in November and the Aggressive portfolio gained 1.40%. Benchmark Vanguard funds for November 2017 were as follows: Vanguard 500 Index Fund (VFINX) up 3.06%; Vanguard Total Bond Market Index Fund (VBMFX) down 0.17%; Vanguard Developed Markets Index Fund (VTMGX) up 0.85%; Vanguard Emerging Markets Stock Index (VEIEX) up 0.18%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 1.40%.

With bonds down and stocks up, up, and away our portfolios did a little better than expected for their risk level this month. The Vanguard STAR fund benchmark was also up 1.4% in November matching our Aggressive portfolio exactly, however, in down markets we're generally falling less than this total portfolio fund, mostly because of our short positions and longer-duration bond holdings.

Our lower-risk stance also resulted in our under-performing the Vanguard STAR fund so far this year. The S&P 500 is up just over 20% in 2017, while Vanguard STAR is up just over 17% — as opposed to 11.97% YTD for our Aggressive portfolio and 12.65% for our Conservative portfolio. (The fact that a balanced conservative portfolio is up over 12% YTD and we're making excuses about the poor performance is one reason this market is overheated. By now, a down market almost seems nostalgic.)

Shorting MLPs worked even with rising oil prices as ETRACS 1xMonthly Short Alerian MLP (MLPS) was up 3.2% for the month. This short fund is having a good year for an inverse fund, up around 12% even in the face of a strong economy and rising oil prices. This is a tiny fund and unpopular strategies tend to work (like shorting commodities with funds in 2008 on or buying commodities long in 2000-2002).

Value stocks did well last month with Vanguard Value (VTV) up 3.52% and Homestead Value (HOVLX) up 3.11%. Utilities and telecoms rebounded with Vanguard Utilities (VPU) up 2.89% and Vanguard Telecom Services ETF (VOX) up 2.48%. Basically everything we owned in stocks was up that wasn't short.

In bonds SPDR Barclays Intl. Treasury (BWX) was up 2.11% as the U.S. dollar turned back down. Vanguard Extended Duration Treasury (EDV) was up 1.35% while longer-term bonds outperformed shorter-term bonds. In addition, lower-risk debt did better than higher-risk debt, which is why Artisan High Income Fund (ARTFX) was down 0.45% while the bond index fell 0.17% and longer-term government bond indexes were up. Our prediction for a flat yield curve in the future is slowly coming true, especially with a Fed dying to prove their inflation fighting powers (hopefully not to the point of deflation).

In general, U.S. stocks beat foreign stocks though for the year foreign stocks have now outperformed the U.S. (this is partly due to a falling dollar).

Surprisingly both cyclical AND defensive stocks beat the S&P 500 in November — as if investors are evenly split on making bets on both a booming economy and a collapse.

With so much money going into indexing it's almost a surprise everything isn't moving in unison. But for all the indexing going on there's still plenty of betting on specific areas, just through index funds. This is why long-term under-performance of broad indexes will continue even with the savings in active management fees.

Our win over benchmarks in August turned into a loss for September.

Stocks were hot and recent bond gains evaporated as investors moved back into risky assets. Interest rate sensitive stocks (like telecom and utilities) were down as well — 10-year treasury bond yields moved from just over 2% in early September to over 2.3% by the end of the month.

Our Conservative portfolio declined 0.07% in September. Our Aggressive portfolio fell 0.08%. Benchmark Vanguard funds for September 2017 were as follows: Vanguard 500 Index Fund (VFINX) up 2.06%; Vanguard Total Bond Market Index Fund (VBMFX) down 0.54%; Vanguard Developed Markets Index Fund (VTMGX) up 2.40%; Vanguard Emerging Markets Stock Index (VEIEX) down 0.78%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, gained 1.67%.

Our longer-term bond funds declined in this environment, though with stock upside we didn't decline as much as the bond index. In general, having stocks and long-term bonds has had a better risk vs. return in most environments than just pure bond index — which is lower yield but less interest rate sensitive. A mixed portfolio benefits from the extra yield of longer-term bonds, the growing stock dividend yield with inflation protection, and offsetting bond gains for stock losses when the markets get scary.

Stocks are getting hot again as investor fears over Nuclear Armageddon-lite recede, even if the situation on the ground hasn't particularly improved.

Our falling dollar this year plus years of underperformance abroad has boosted foreign stocks in recent months.

The global economy seems strong and stable with a solid job market domestically.

Interest rates to seem too low to warrant easing up on stocks. This risk focus is creating opportunities in some lower-risk stock sectors like telecom and we expect to increase these allocations in coming months.

With no inflation in sight and rising rates, gold was weak, boosting our gold short Gold Short (DZZ) 6.33% and making it our top September holding.

Most of the bigger gains were foreign funds last month and most beat the S&P 500. The exception was a strong 5.33% showing in Homestead Value (HOVLX) which owns U.S. value stocks.

Losers in stocks included Vanguard Utilities (VPU) down 3.24% and Vanguard Telecom Services ETF (VOX) down 1.38% with a big 15.70% loss in PowerShares DB Crude Oil Dble Short (DTO) (oil reversed course in September). Telecom and shorting oil should work well going forward.

Our most interest rate sensitive holding, Vanguard Extended Duration Treasury (EDV) slid 4.03% while Vanguard Long-Term Bond Index ETF (BLV) fell 0.84%. High-risk bonds, which often move like stocks, pushed up Artisan High Income Fund (ARTFX) 1.2%. The dollar slide eased a bit, sending SPDR Barclays Intl. Treasury (BWX) down 1.87%.

On the political initiatives front, it is becoming increasingly likely nothing of significance will get done. The main reason is there is really no way to do anything major given our current large debt without big offsetting spending cuts or tax increases. The only real big new spending is relief of the numerous costly natural disasters. Nobody expects there to be a plan to pay for these even though there probably is more political support to do so than any other new spending. The do-nothing course means an increasing, even with a strengthening economy.

It was another solid month for stocks globally, with essentially everything up. The only fund category displaying red arrows was longer-term government funds, and this bond fund category, sensitive to interest rates, was down less than 1%. The strongest areas were once again abroad, as foreign markets continue to catch up after years of underperforming the U.S. market.

Even with the drag of shorting and longer-term government bonds, we had a solid month against benchmarks with the extra boost from some foreign markets. Coincidentally, our conservative portfolio had the exact same return as our Vanguard Star fund benchmark, which is riskier than our conservative model portfolio.

The Conservative portfolio gained 1.71% while our Aggressive portfolio gained 2.16%. Benchmark Vanguard funds performed as follows in July 2017: Vanguard 500 Index Fund (VFINX) up 2.04%; Vanguard Total Bond Market Index Fund (VBMFX) up 0.37%; Vanguard Developed Markets Index Fund (VTMGX) up 2.94%; Vanguard Emerging Markets Stock Index (VEIEX) up 5.31%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 1.71%.

While markets were strong in the U.S. in non-sectors, really just larger cap growth, stocks did notably well with a near 3% return. Smaller cap was barely up, particularly value stocks. Abroad, the hottest market was Latin America, with funds in this category up just under 9%, followed closely by India and China funds, both up over 5%. Russia was up over 4%. This drove returns on our top returner last month, iShares MSCI BRIC Index (BKF), up 8.33%. Italy was about the strongest area in non-emerging markets, driving iShares MSCI Italy Capped (EWI) up 7.05%. We didn't even lose that much shorting small cap stocks with leverage, as Proshares Ultrashort Russel2000 (TWM) was down 1.76% because small cap stocks were lagging in July. Shorting gold, biotech, and notably oil hurt as they all went up.

In bonds, strong corporates hid our losses in longer-term government bonds in our holdings, except in Vanguard Extended Duration Treasury (EDV), which was down 0.53%. This is a 100% long-term U.S. government bond fund, and in effect the longest-term Treasury bond fund, which makes it the most sensitive to interest rates. The reason for most of the gains abroad in stocks — the falling U.S. dollar — pushed SPDR Barclays Intl. Treasury (BWX) up 2.93% for the month.

Besides investors rebalancing into underperforming assets, what is driving this global goodness in recent months is other countries looking a little better than they did last year, while we are looking a little worse. The likelihood of significant new policy initiatives to boost the economy if the Fed continues to raise rates looks slim at best, including any tax cuts. Our dollar was riding high a few months ago on continued American optimism for growth and higher interest rates compared to other major economies. Higher rates can attract money from abroad looking for safe yield. This earlier flow is reversing as our interest rates drift down slightly. The early Trump boom is gone but investors are confident in investing everywhere, and perhaps overly confident.

The Powerfund Portfolios posted solid gains in May, with both the Conservative and Aggressive portfolios beating Vanguard's main U.S. stock index and total global fund. As we're taking less risk than these funds it's harder to do this in an up market (as May was), than a down one.

We've been more or less lagging benchmarks indexes since the Trump election upset so it is a little early to spike the football, but our year-to-date figures are now closing in on these hard to beat funds. Adjusting for risk we more often beat both Vanguard's U.S. stock index and total global fund, as will probably become apparent again in any meaningful stock market drop.

In May, our Conservative portfolio gained 2.03%. Our Aggressive portfolio jumped 1.92%. Benchmark Vanguard funds for May 2017 were as follows: Vanguard 500 Index Fund (VFINX) up 1.39%; Vanguard Total Bond Market Index Fund (VBMFX) up 0.67%; Vanguard Developed Markets Index Fund (VTMGX) up 3.41%; Vanguard Emerging Markets Stock Index (VEIEX) up 1.22%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, gained 1.86%.

While the stock market's brief sharp drop in mid-May has largely been erased in recent days, most of our upside has been from the U.S. dollar declining as the euro, and foreign stock markets, have been hot (after a long spell of underperformance for both).

In the U.S. the strongest funds in May were in large-cap growth stocks. Small-cap value funds where down nearly 3% on average. We're short small-cap but the hedge has mostly been a bust in this hot market led by riskier small-caps. In general, we would prefer shorting small-cap value as that category has been the most overpriced of late, but this is not easy to do with inverse ETFs.

Almost all foreign markets beat the S&P 500 in May, except for Latin American funds which were the sole big category loser, down about 3%. This dragged on our iShares MSCI BRIC Index (BKF) stake which posted only a 1.36% return.

Long-term investment-grade bonds were top performers as interest rates declined. We had a 3.2% gain in Vanguard Extended Duration Treasury (EDV) and a 1.9% jump in Vanguard Long-Term Bond Index ETF (BLV). The falling dollar helped boost SPDR Barclays Intl. Treasury (BWX) 1.92%. Higher-risk bonds did fine but the bigger gains where in more interest rate sensitive bonds. We're considering exiting our strong performing high yield bond fund Artisan High Income Fund (ARTFX), which was up 0.58% in May.

In sectors, financials and energy were weak — high beta stocks that have done well since Trump's election. The only real drags were Vanguard Telecom Services ETF (VOX), down 3.06%, and iShares Mortgage REIT (REM), down 1.47%. The former's poor performance was a bit of a surprise as safe and yield have been doing well. The latter's rough month was probably just a bit of a correction after big recent gains.

Other than a basically flat month shorting gold, our shorts were helping returns (it has been awhile..) with Proshares Ultrashort NASDAQ Biotech (BIS) up 7.49%, ETRACS 1xMonthly Short Alerian MLP (MLPS) up 6.38%, PowerShares DB Crude Oil Dble Short (DTO) up 5.31%, and Proshares Ultrashort Russel2000 (TWM) up 3.67%. With mostly big returns abroad — iShares MSCI Italy Capped (EWI) up 5.37%, and Vanguard European ETF (VGK) up 4.91% — AND good returns in bonds, we couldn't help but have a good May.