The Conservative Portfolio climbed 1.29% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
In 2008 many top value funds tanked, largely because of exposure to supposedly cheap banks, financials, home builders, and natural resource companies. This year many hard-hit funds that have a value tilt are recovering nicely. Vanguard U.S. Value (VUVLX) has not been in this group, but then the fund didn’t fall more than the S&P 500 last year. In August the fund had a good month, up 4.15%.
Vanguard Telecom Service ETF (VOX) slipped 0.86% as telecom stocks were weak in August as investors continued to pour into what got hit the hardest in 2008. The hot streak of earlier this year has ended. This remains an out-of-favor area with fund investors.
Junk bonds continued to climb and have better year-to-date returns than most stock funds Metropolitan West High Yield Bond (MWHYX) was up 1.72% in August. This category is fast losing appeal to us.
The Aggressive Portfolio rose 1.87% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
Vanguard Pacific Stock ETF (VPL) was up 3.24% in August as Japan stocks have rebounded nicely this year. Japan has been out of favor with fund investors as they tend to focus on more dynamic (and overpriced) emerging markets and countries like China.
August 2009 Performance Review
The Conservative Portfolio climbed 1.29% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
In 2008 many top value funds tanked, largely because of exposure to supposedly cheap banks, financials, home builders, and natural resource companies. This year many hard-hit funds that have a value tilt are recovering nicely. Vanguard U.S. Value (VUVLX) has not been in this group, but then the fund didn’t fall more than the S&P 500 last year. In August the fund had a good month, up 4.15%.
Vanguard Telecom Service ETF (VOX) slipped 0.86% as telecom stocks were weak in August as investors continued to pour into what got hit the hardest in 2008. The hot streak of earlier this year has ended. This remains an out-of-favor area with fund investors.
Junk bonds continued to climb and have better year-to-date returns than most stock funds Metropolitan West High Yield Bond (MWHYX) was up 1.72% in August. This category is fast losing appeal to us.
The Aggressive Portfolio rose 1.87% in August.
In August, just about everything went up. The S&P 500 rose 3.6%, pushing the year-to-date return on the market further into double-digit territory. The Nasdaq, which had been leading from the market low in early March, was up just 1.55% for the month. Small-cap stocks were somewhere in the middle with the Russell 2000 index gaining 2.87%. Even bonds had a good month as interest rates turned back down in the face of signs the economy was on the mend. Longer-term government bonds were up 1.78%, while the total bond market posted a just over 1% gain.
The few areas of weakness included commodities and some Asian markets, as well as telecom and biotech stocks. We have some sector allocations to these sectors which played a role in our returns being in the 1.2% - 3.2% range for the month - enough to keep all but the Safety and Daredevil Powerfund Portfolios ahead of the S&P 500 this year.
This upward trajectory for stocks is starting to make us a little nervous. If more economic troubles appear in coming months, the downside will be significant, particularly in all the leveraged and economically sensitive companies that have rebounded strongly recently. At around Dow 10,000 the market is saying, “The worst is over, economic growth will be slow going forward, but we’re not going to fall into another recession soon.” With such a built-in valuation, if economic growth winds up being strong the market will take off to perhaps new highs in a few years. If we get a second recession – the double dip like we saw in the early 1980s – Dow 7,500 is a possibility.
Nakoma Absolute Return (NARFX) fell 0.57% in August as a continued negative stance hurt returns.
Vanguard Pacific Stock ETF (VPL) was up 3.24% in August as Japan stocks have rebounded nicely this year. Japan has been out of favor with fund investors as they tend to focus on more dynamic (and overpriced) emerging markets and countries like China.