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.

The rally in stocks fizzled in March and bonds didn't offer much help as rates drifted up slightly. Foreign stocks performed better as the valuation gap — after years of underperformance to the U.S. stock market — may be attracting more money.

Our Conservative portfolio gained 0.69% in March. The Aggressive portfolio rose 0.85%. Benchmark Vanguard funds for March 2017 were as follows: Vanguard 500 Index Fund (VFINX) up 0.10%; Vanguard Total Bond Market Index Fund (VBMFX) down 0.06%; Vanguard Developed Markets Index Fund (VTMGX) up 3.00%; Vanguard Emerging Markets Stock Index (VEIEX) up 2.25%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 0.85%.

We beat the benchmarks this month (finally…) largely on the strength of foreign stock funds, and fair performance from our shorts (including a 10% gain in PowerShares DB Crude Oil Dble Short (DTO)). At the top of the traditional fund heap was iShares MSCI Italy Capped (EWI), up 8.84% for the month and leading the already strong European markets (Vanguard European ETF (VGK) also performed well, up 4.43%)).

Emerging markets were hot with iShares MSCI BRIC Index (BKF) up 2.57%, largely on the work of Indian stocks.

Mortgage REITs also sizzled, with the Conservative portfolio's iShares Mortgage REIT (REM) up 2.88%. In general we're seeing risky yield-reach again by investors.

Our only notable bad performers from March: Vanguard Telecom Services ETF (VOX), down 2.11% — and now quite attractive again given recent lagging. Value stocks in general were weak with Homestead Value (HOVLX) down 0.72% and Vanguard Value (VTV) down 0.92%. We had mild declines in longer-term bond funds like Vanguard Long-Term Bond Index ETF (BLV), down 0.70%, and Vanguard Extended Duration Treasury (EDV) down 0.97% — though longer-term bonds are not attractively priced after the big gain in U.S. stocks over the last year.

Large-cap growth was the strongest U.S. category with a roughly 1% return, but we're not directly exposed here now.

Foreign stocks aren't really that cheap when you factor in the likely slower earnings growth than the U.S. market in larger markets and the heighted risk in emerging markets, but with our currency expensive after a multi-year rise large gains can be made investing abroad in unhedged funds solely on our currency weakening. Bottom line: you are now getting more diversification benefit from owning foreign assets than probably anytime in the last 10 years.

Non-emerging market foreign stock fund categories generally have higher ratings on our proprietary category rating system because the returns have been relatively weak and money flows have been less positive recently. Ideally we'd see huge outflows from foreign stock funds, which we'd buy into. But there may just be too many investors today who diversify to any and evertying, in contrast to the sort of 1990s style performance chasing we used to witness. Emerging market stock funds have done well and have beaten U.S. markets this year but are still seriously underperforming from levels hit in early 2011 — actually going in a different direction completely through much of this time. Right now, emerging market stocks are not that attractive given the recent gains, and interest by investors we'll likely focus more on larger foreign economies.

The interest rate increase that accelerated when President Trump won in November ended in December.

Rate-sensitive investments across the board have performed well in recent weeks, pushing our Conservative portfolio up more than our Aggressive portfolio in January.

Stocks remained strong, though the overall investor shift from bonds to stocks has slowed.

Upside in stocks (and downside in bonds) could be limited without actual tax-and-spend policy taking shape and with no signs of rising inflation.

The Federal reserve just took a break on rate increases because economic growth and inflation just aren't there yet to warrant much higher short term rates.

Our Conservative portfolio gained 1.11%. Our Aggressive portfolio advanced 0.69%. Benchmark Vanguard funds for January 2017 were as follows: Vanguard 500 Index Fund (VFINX) up 1.88%; Vanguard Total Bond Market Index Fund (VBMFX) up 0.29%; Vanguard Developed Markets Index Fund (VTMGX) up 3.66%; Vanguard Emerging Markets Stock Index (VEIEX) up 4.94%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 2.11%.

Our strongest area was in emerging markets with iShares MSCI BRIC Index (BKF) up 7.31%, well above broader emerging market index returns.

Europe was strong but Italy took a breather after a hot streak. iShares MSCI Italy Capped (EWI) was down 1.94% in January — our only negative returning stock or bond fund last month that wasn't shorting.

Speaking of, PowerShares DB Crude Oil Dble Short (DTO) was the lone area of shorting success in January.

Junk bonds led the bond market again with Artisan High Income Fund (ARTFX) up 1.64% but recently hit foreign bonds rebounded with SPDR Barclays Intl. Treasury (BWX) up 1.46% as the U.S. dollar's rise may have also reached a limit. The rebound in junk bonds has now been significant and is increasing downside risk if the economy appears to weaken. As investment grade yields are higher than a few months ago the spread in yields between higher-risk and lower-risk debt isn't as appealing.

It was a November to remember.

November was Donald Trump's month in the markets. Nobody saw him winning much less U.S. stocks going up in the wake, but weirdly many of the stocks that did well after the surprise Trump victory started doing so before the election. Maybe this oddity — which could be a mere coincidence — will show up in the fake news that permeates the conspiracy circles online. Talk about a bull market…

One global equity strategist for Barclays — one of the largest asset managers — predicted that in the event of an unlikely Trump win stocks would fall around 7%. Wrong and wrong.

The most important takeaway for investors here is no matter how you feel about Trump, don't stop investing and hide for four or eight years waiting for America to burn. (That is a fire that some have expected since the dawn of the republic.) I said the same thing over the last eight years to those who were certain that Obama was going to destroy America and its economy. Those who stayed in cash, commodities, and gold — perhaps with seed and water-purifiers— missed out on perhaps the greatest average annual returns in stocks during any president's time in office. I'm trying not to jinx it…

The political pendulum has swung, but that doesn't mean Trump will destroy the economy either. Around half of the people probably think his policies will help the economy. This doesn't mean your portfolio needs to look the same as it did in 2009. The scary period after the Trump victory was in the first few hours. Futures that trade on stocks after hours were down sharply — like 5% sharply. This trend reversed by the time regular trading began and became the full-fledged "Trump rally" that is now getting too much attention in the press. Sort of like Trump.

While there were some intriguing moves up and down post-Trump — biotech stocks moved up, maybe because of less political heat on pricing — the overall global asset picture was not impressive. The total value of all assets declined, while the U.S. stock market and U.S. dollar "won." We have a global portfolio of stocks and bonds that is tied fairly highly to interest rates and took a blow.

As an example of how fleeting the Trump bump can be, and the inherent unpredictability of Trump policy can be, Biotech stocks are now (as of December 7th) falling fast on a comment from Trump that, "I`m going to bring down drug prices. I don`t like what has happened with drug prices." It's like having Bernie Sanders, Ross Perot, and Ronald Reagan share the presidency.

Our Conservative portfolio declined 3.50%. Our Aggressive portfolio declined 2.76%. Benchmark Vanguard fund performance for November 2016 was as follows: Vanguard 500 Index Fund (VFINX) up 3.70%; Vanguard Total Bond Market Index Fund (VBMFX) down 2.64%; Vanguard Developed Markets Index Fund (VTMGX) down 1.53%; Vanguard Emerging Markets Stock Index (VEIEX) down 4.36%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 0.41%.

It is very rare to see these benchmarks down so much relative to the S&P 500. Of the over 100 fund categories (large-cap value, technology, muni bond, small-cap growth, utilities, etc.), about 85% underperformed the S&P 500 in November. The average category was down about a half percent. Considering that most fund categories are composed of U.S. stocks, this wasn't a very good month overall. If you factor in real estate prices, which likely slipped with rising rates, global wealth almost certainly declined.

Our portfolios also underperformed the S&P 500. All the bond funds were down, with long-term bond funds such as Vanguard Long-Term Bond Index ETF (BLV) down 6.3%, while SPDR Barclays Intl. Treasury (BWX) slid 5.72% on the double hit of a rising U.S. dollar and falling bond prices with rising yields. Only our gold short fund Gold Short (DZZ) scored a big win — up 17%. We did well with value funds: Vanguard Value (VTV) up 6% and Homestead Value (HOVLX) up 5.66%. Besides shorting stocks, which was a disaster, utilities and our foreign funds were down for the month. While both are still up for the year, we are now well behind the S&P 500's near 10% rise with dividends.

As an investor, the question is: does this continue and the U.S. dollar and U.S. stocks become "great again" at the expense of other assets, in a Trumpian zero-sum game where we win only if Mexico and China start to lose? Unlikely. We're near the tail end of a long run in the U.S. dollar, which is why we are fairly heavy abroad now in the first place, which is not how our portfolios looked in 2008.

The problem is that it's hard to win without everybody winning on some level. We can put punitive tariffs on imports and give tax breaks to those that play by the new rules, but eventually, others will do this; for every 1,000 jobs that are "saved" here, we'll lose as many to another country that's trying to save its jobs. And all the while, governments around the world go broke by lowering taxes and increasing spending, while incentivizing companies to stay put pushing interest rates and borrowing costs up as borrowing increases to finance the gap in revenues and spending.

So why do investors seem to like the current situation? It is unlikely that if Bernie Sanders won the election and proposed similar anti-free trade initiatives to solve income inequality and boost the pay of the working person, Wall Street would cheer. It is possible that companies will benefit at the expense of governments (stop clapping) as tax incentives and bribes to fight the natural forces of globalization lead to higher after-tax profits, while consumers spend more as after-tax wealth increases. This scenario assumes tariff trade wars don't start, we don't get buried in debt with increasing rates needed to entice our new enemies abroad to buy, and economic growth increases enough to cover these shortfalls.

This all could just be the trigger event for investors to pile back into U.S. investments after years of investing abroad instead of in underperforming U.S. markets. The latest fund flow data shows investors leaving foreign markets and going into U.S. stocks post-election. This could be short lived and lead to foreign funds outperforming again soon. Late 2014 was a period of down foreign markets and up U.S. markets, and investors started to favor U.S. markets heavily for a few months. Foreign markets then spent the next few months outperforming U.S. markets. Or this trend could signal the end of the popularity of foreign investing, much like what happened in the late 1990s, eventually setting us up for years of foreign stock outperformance like the first part of the 2000s as the U.S. sinks.

The main question here is how high can interest rates go on expectations of a higher growth economy after a Trump tax-cut-and-spend stimulus package, one that presumably will kick in without a recession in place or particularly high unemployment. Global interest rates are very low for a reason; most countries face deflation and weak economies. If our rates go way up relative to other countries, the dollar will continue rising until it causes economic and earnings problems for U.S. companies.

The strange part of this Trump rally is that all the "pre-Trump" stocks were getting expensive and popular — rate-sensitive plays such as utilities and "low-volatility" stocks. We were setting up for outperformance in "high beta" stocks like financials and energy as a contrarian call. Then Trump won, and the fix happened in days. Bummer for us still stuck in October's portfolio, although we were migrating slowly to higher beta in client accounts this year. Too slowly. We weren't migrating because of a bold Trump prediction, but because the money was all going low risk, and taking on risk was going to pay off, as it did in November — with a bang. The proof, as we noted before, was the launch of dozens of low-volatility, "smart beta" ETFs and the almost total lack of new high beta or riskier-than-the-market funds.

Investments to consider adding or increasing post-Trump include:

TIPs — In theory, they offer more protection against rising inflation, though not against rising rates without much inflation. In that situation, they will do as poorly as regular bonds or worse.

Gold (to short) — Many of the calls for gold were based on American declinism, however unfounded that view was. A rising dollar and America being great again, even if that is a largely psychological phenomenon, could lead to those hoarding coins (and seed…) to unload and consider assets more tied to American prosperity.

High Beta — Risky and economically sensitive stocks and small-cap stocks have already done well in recent weeks, so big moves here, months before any policy change, could be too much risk based on expectations alone, but these are still a better idea than low-volatility stocks.

Oil (short) — While there may be some stocks that benefit, actual barrels of oil will get cheaper with more exploration. OPEC is already trying to get ahead of this new glut with production cuts that temporarily sent oil prices back up.

Foreign bonds — This could be risky in the short run, but in the long run, our dollar is near the top of how high it can go without self-correcting economic activity kicking in. Moreover, unless Trump-style politics spreads (beyond Brexit), you'd rather lend money to governments that don't increase spending and cut taxes. This is ultimately why buying, say, California Muni bonds worked out in recent years after panic lows post-2008. Those governments didn't cut taxes to try and grow out of the deficit; they raised tax revenue faster than spending. Stinks if you are a taxpayer; doesn't stink if you are a bondholder.

Emerging markets — Limit exposure to emerging markets, except maybe to Russia (our new BFF). Any plans to keep jobs in America doesn't hurt, say, Germany as much as it does emerging markets where those jobs were heading.

Bonds — Just because everybody is looking for the end of the great bull market in bonds doesn't mean interest rates are going back to 6% any time soon.

??? — This Trump investing guessing game can be dangerous, unpredictable, and not based on repeatable logic. Nobody knows what is going to happen. In general, we're going to keep the focus on less-favored investments and wait for the stories to push these areas back up in price, which is essentially what happened in recent weeks. I'm mad at myself, not for not predicting a Trump win and U.S. stock rally but for pushing off buying out-of-favor financials, energy stocks (not oil itself), and high beta stocks with more economic than interest-rate sensitivity. Trump was just the catalyst. Don't think of news driving the investment returns so much as the news following the investment returns — which in turn are driven significantly by how much money is trying to earn returns in various investments.

And to the half of the country that thinks the 1980s are back, there are many differences between 2017 and 1981. We're older. Taxes, interest rates, and inflation are already low. The debt is far higher as a percent of GDP. The current stock-market dividend yield is a lot smaller, and the P/E ratio is a lot higher. Bidding up stocks valuations significantly based on expectations of greatness could make the next crash more like 1929 than 1987.