We know it is difficult to buy after losing significant money in the worst market drop since the Great Depression. Most fund investors are either sitting still or selling. We can’t do that at MAXadvisor – it is against our philosophy.
Broadly speaking, this trade increases our stake in riskier funds – both stock and bond - in all portfolios. We are selling safer funds and adding risk because we feel over the next 2-5 years this move will let us continue our S&P 500-beating returns in our model portfolios.
Those that want to know where we stood last year near market highs should consult our archives from <a href=” http://maxadvisor.com/newsletter/archives.php “>last year</a>. It will likely make you more comfortable with this hard-to-stomach buy.
We will have more specific written information on this trade on our site by Monday. For now you can review all the trade details online. If you are following our model portfolios, you can make these trades as soon as feasible for you (as always be aware of short term redemption fees, tax implications, etc).
This will not be our last trade if global stock markets continue to drop – we have yet to bring emerging market funds back into the portfolios – markets which are now down far more then the S&P 500.
We're making trades in the Conservative portfolio, effective 10/31/2008:
<b>Sales:</b>
• REDUCE Harbor Bond (HABDX) from 25% to 15%
• REDUCE Dreyfus Bond Mkt Idx Bas (DBIRX) from 20% to 10%
<b>Buys:</b>
• INCREASE Vanguard Telecom Serv ETF (VOX) from 5% to 10%
• NEW ALLOCATION BlackRock MuniAssets Fund (MUA) to 15%
Pessimism is rising with collapsing stock and non-Government bonds markets. We’re using the near 50% drop in stocks and significant hit to higher-risk bonds as an opportunity to cut back on investment grade bonds and move into equities and distressed bonds.
Vanguard Telecom Services ETF (VOX) is an ETF we once owned for big gains. With the recent collapse the relatively safe high dividends here should lead to a market-beating recovery down the road. With above-money market yield dividends even if the recovery takes a long time this VOX should be a good investment.
Municipal bonds have been hit hard recently with troubles emerging in state financing. The real destruction has been in closed-end muni bonds, commonly sold with a sales commission built in by brokers to investors looking for safe income. These investors are panic selling their muni bond funds, likely with stop loss orders, and creating massive discounts to NAV. Closed-end funds, unlike traditional open-end funds, have an intraday market price like a stock but also an underlying NAV like open-end funds and ETFs. While closed-end funds are generally riskier than open-end funds because many use leverage (though NUV does not), there is the potential to make more as markets improve and the historically wide discounts to NAV shrink to more normal levels.
NOTE: Please be careful buying closed-end funds. With market volatility the way it has been many of these funds have moved spectacularly – 20% - 80% - in one day. Do not buy any closed-end fund we recommend if it is trading at a premium to NAV (check <a href="http://www.etfconnect.com/">etf-connect.com</a>) or goes up significantly more than similar funds in a short period of time. Please choose an alternative in such a case.
We know it is difficult to buy after losing significant money in the worst market drop since the Great Depression. Most fund investors are either sitting still or selling. We can’t do that at MAXadvisor – it is against our philosophy.
Broadly speaking, this trade increases our stake in riskier funds – both stock and bond - in all portfolios. We are selling safer funds and adding risk because we feel over the next 2-5 years this move will let us continue our S&P 500-beating returns in our model portfolios.
Those that want to know where we stood last year near market highs should consult our archives from <a href=” http://maxadvisor.com/newsletter/archives.php “>last year</a>. It will likely make you more comfortable with this hard-to-stomach buy.
We will have more specific written information on this trade on our site by Monday. For now you can review all the trade details online. If you are following our model portfolios, you can make these trades as soon as feasible for you (as always be aware of short term redemption fees, tax implications, etc).
This will not be our last trade if global stock markets continue to drop – we have yet to bring emerging market funds back into the portfolios – markets which are now down far more then the S&P 500.
We're making trades in the Aggressive Growth portfolio, effective 10/31/2008:
<b<Sales:</b>
• SELL ALL Vanguard Intm Bd Idx (VBIIX) from 10% to 0%
• REDUCE Harbor Bond (HABDX) from 15% to 5%
<b>Buys:</b>
• NEW ALLOCATION Vanguard Pacific Stock ETF (VPL) to 5%
• NEW ALLOCATION Vanguard Telecom Serv ETF (VOX) to 10%
• NEW ALLOCATION Western Asset Managed High Income Fund (MHY) to 5%
Pessimism is rising with collapsing stock and non-Government bonds. We’re using the near 50% drop in stocks and widespread fear as an opportunity to cut back on investment grade bonds and move into stocks and distressed bonds.
The Japanese stock market is collapsing to near 2002 lows when we last increased our stake in Japan funds. We were a little too early getting back into Japan recently, we’re confident that this is a good time to increase our stake in Vanguard Pacific Stock ETF (VPL).
Vanguard Telecom Services ETF (VOX) is an ETF we once owned for big gains. With the recent collapse the relatively safe high dividends here should lead to a market-beating recovery down the road. With above-money market yield dividends even if the recovery takes a long time this VOX should be a good investment.
High yield (junk) bonds have been in a near free-fall recently, behavior that has been magnified by closed end funds.
Closed-end funds, unlike traditional open-end funds that we ordinarily own in our newsletter, have an intraday market price like a stock, but an underlying NAV like open-end funds and ETFs. Since there is no fund company creating or redeeming shares at NAV as is the case with ordinary open-end funds or a system to effectively do the same as is the case with ETFs, closed-end funds can trade at huge discounts to actual underlying fund values during times of panic selling.
While these funds are generally riskier than open-end funds because many use leverage (MHY does not), there is the potential to make more as markets improve and the historically wide discounts to NAV shrink to more normal levels.
NOTE: Please be careful buying closed-end funds. With market volatility the way it has been many of these funds have moved spectacularly – 20% - 80% - in one day. MHY falls under this category and should not be bought until the price settles down to at least a 15% discount. Do not buy any closed-end fund we recommend if it is trading at a premium to NAV (check <a href="http://www.etfconnect.com/">etf-connect.com</a>) or goes up significantly more than similar funds in a short period of time. Please choose an alternative from one of the other portfolios in such a case.
October 2008 Trade alert!
We know it is difficult to buy after losing significant money in the worst market drop since the Great Depression. Most fund investors are either sitting still or selling. We can’t do that at MAXadvisor – it is against our philosophy.
Broadly speaking, this trade increases our stake in riskier funds – both stock and bond - in all portfolios. We are selling safer funds and adding risk because we feel over the next 2-5 years this move will let us continue our S&P 500-beating returns in our model portfolios.
Those that want to know where we stood last year near market highs should consult our archives from <a href=” http://maxadvisor.com/newsletter/archives.php “>last year</a>. It will likely make you more comfortable with this hard-to-stomach buy.
We will have more specific written information on this trade on our site by Monday. For now you can review all the trade details online. If you are following our model portfolios, you can make these trades as soon as feasible for you (as always be aware of short term redemption fees, tax implications, etc).
This will not be our last trade if global stock markets continue to drop – we have yet to bring emerging market funds back into the portfolios – markets which are now down far more then the S&P 500.
We're making trades in the Conservative portfolio, effective 10/31/2008:
<b>Sales:</b>
• REDUCE Harbor Bond (HABDX) from 25% to 15%
• REDUCE Dreyfus Bond Mkt Idx Bas (DBIRX) from 20% to 10%
<b>Buys:</b>
• INCREASE Vanguard Telecom Serv ETF (VOX) from 5% to 10%
• NEW ALLOCATION BlackRock MuniAssets Fund (MUA) to 15%
Pessimism is rising with collapsing stock and non-Government bonds markets. We’re using the near 50% drop in stocks and significant hit to higher-risk bonds as an opportunity to cut back on investment grade bonds and move into equities and distressed bonds.
Vanguard Telecom Services ETF (VOX) is an ETF we once owned for big gains. With the recent collapse the relatively safe high dividends here should lead to a market-beating recovery down the road. With above-money market yield dividends even if the recovery takes a long time this VOX should be a good investment.
Municipal bonds have been hit hard recently with troubles emerging in state financing. The real destruction has been in closed-end muni bonds, commonly sold with a sales commission built in by brokers to investors looking for safe income. These investors are panic selling their muni bond funds, likely with stop loss orders, and creating massive discounts to NAV. Closed-end funds, unlike traditional open-end funds, have an intraday market price like a stock but also an underlying NAV like open-end funds and ETFs. While closed-end funds are generally riskier than open-end funds because many use leverage (though NUV does not), there is the potential to make more as markets improve and the historically wide discounts to NAV shrink to more normal levels.
NOTE: Please be careful buying closed-end funds. With market volatility the way it has been many of these funds have moved spectacularly – 20% - 80% - in one day. Do not buy any closed-end fund we recommend if it is trading at a premium to NAV (check <a href="http://www.etfconnect.com/">etf-connect.com</a>) or goes up significantly more than similar funds in a short period of time. Please choose an alternative in such a case.
We know it is difficult to buy after losing significant money in the worst market drop since the Great Depression. Most fund investors are either sitting still or selling. We can’t do that at MAXadvisor – it is against our philosophy.
Broadly speaking, this trade increases our stake in riskier funds – both stock and bond - in all portfolios. We are selling safer funds and adding risk because we feel over the next 2-5 years this move will let us continue our S&P 500-beating returns in our model portfolios.
Those that want to know where we stood last year near market highs should consult our archives from <a href=” http://maxadvisor.com/newsletter/archives.php “>last year</a>. It will likely make you more comfortable with this hard-to-stomach buy.
We will have more specific written information on this trade on our site by Monday. For now you can review all the trade details online. If you are following our model portfolios, you can make these trades as soon as feasible for you (as always be aware of short term redemption fees, tax implications, etc).
This will not be our last trade if global stock markets continue to drop – we have yet to bring emerging market funds back into the portfolios – markets which are now down far more then the S&P 500.
We're making trades in the Aggressive Growth portfolio, effective 10/31/2008:
<b<Sales:</b>
• SELL ALL Vanguard Intm Bd Idx (VBIIX) from 10% to 0%
• REDUCE Harbor Bond (HABDX) from 15% to 5%
<b>Buys:</b>
• NEW ALLOCATION Vanguard Pacific Stock ETF (VPL) to 5%
• NEW ALLOCATION Vanguard Telecom Serv ETF (VOX) to 10%
• NEW ALLOCATION Western Asset Managed High Income Fund (MHY) to 5%
Pessimism is rising with collapsing stock and non-Government bonds. We’re using the near 50% drop in stocks and widespread fear as an opportunity to cut back on investment grade bonds and move into stocks and distressed bonds.
The Japanese stock market is collapsing to near 2002 lows when we last increased our stake in Japan funds. We were a little too early getting back into Japan recently, we’re confident that this is a good time to increase our stake in Vanguard Pacific Stock ETF (VPL).
Vanguard Telecom Services ETF (VOX) is an ETF we once owned for big gains. With the recent collapse the relatively safe high dividends here should lead to a market-beating recovery down the road. With above-money market yield dividends even if the recovery takes a long time this VOX should be a good investment.
High yield (junk) bonds have been in a near free-fall recently, behavior that has been magnified by closed end funds.
Closed-end funds, unlike traditional open-end funds that we ordinarily own in our newsletter, have an intraday market price like a stock, but an underlying NAV like open-end funds and ETFs. Since there is no fund company creating or redeeming shares at NAV as is the case with ordinary open-end funds or a system to effectively do the same as is the case with ETFs, closed-end funds can trade at huge discounts to actual underlying fund values during times of panic selling.
While these funds are generally riskier than open-end funds because many use leverage (MHY does not), there is the potential to make more as markets improve and the historically wide discounts to NAV shrink to more normal levels.
NOTE: Please be careful buying closed-end funds. With market volatility the way it has been many of these funds have moved spectacularly – 20% - 80% - in one day. MHY falls under this category and should not be bought until the price settles down to at least a 15% discount. Do not buy any closed-end fund we recommend if it is trading at a premium to NAV (check <a href="http://www.etfconnect.com/">etf-connect.com</a>) or goes up significantly more than similar funds in a short period of time. Please choose an alternative from one of the other portfolios in such a case.