In June the market continued downward, with a 5.24% drop in the S&P 500. Small cap stocks were hit harder, off 7.75% for the month (and recently went into officially bear market territory, down 20% from their 2010 peak). The Nasdaq wasn’t much better, falling 6.55%.
At the end of June the S&P 500 was down about 6.66% (yikes!) for the year while our average model portfolio has fallen 2.4%. The strongest areas last month were bonds, with returns for bond funds ranging from 1% to as high as 6% for some longer-term US government bond funds. The Dow was relatively strong with a 3.43% drop.
Once again we’re seeing interest rates decline as the reality of a slow economy and low demand for borrowing trumps fears of government-fueled inflation. Junk bonds performed surprisingly well. Normally, if there is such a thing as “normally” in investing, the boost high yield bonds prices get from lower interest rates during a sliding stock market would be overridden by growing economic fears and expectations for higher defaults in the future on high yield bonds. This is largely why junk bonds did so badly in 2008.
The consensus could now be that the economy won’t grow fast enough to push stocks (or interest rates) up much, but won’t slow enough to increase debt defaults in the economy, a sort of junk bond goldilocks. Our take is that there is too much money going into Junk bonds and that’s a time to be cutting back, as we’ve been doing lately. We prefer the payouts on higher dividend utility and telecom stocks today. While these payouts are not as high as junk bond yields, these stocks are more likely to make the payments if the economy dips anew. They also likely have more stock market like upside from these levels given that high yield bonds are not far off their pre-credit-crisis highs and have outperformed utilities in this recovery.
Bill Gross recently moved back into treasuries, and just in time to get a boost. Harbor Bond was up 1.71% in June, a bit better than the total bond markets 1.57% increase, and above Junk Bonds.
Health Care Select SPDR (XLV) dropped just 1.8% in June, another month during which it was down less than the broad market.
American Century Utility Income (BULIX) dipped just 1.28% as higher dividend stocks in out of favor categories fell less than the market.
Telecom stocks booked another market beating month. Vanguard Telecom ETF (VOX) fell just 1.96%. This fund is still underperforming the S&P 500 over the last year, but that should change soon.
Metropolitan West High Yield Bond (MWHYX) rose 0.77% as ongoing economic fears were not so severe as to panic junk bond investors into forecasts for increasing defaults.
The Aggressive Portfolio dropped -2.02% in June.
In June the market continued downward, with a 5.24% drop in the S&P 500. Small cap stocks were hit harder, off 7.75% for the month (and recently went into officially bear market territory, down 20% from their 2010 peak). The Nasdaq wasn’t much better, falling 6.55%.
At the end of June the S&P 500 was down about 6.66% (yikes!) for the year while our average model portfolio has fallen 2.4%. The strongest areas last month were bonds, with returns for bond funds ranging from 1% to as high as 6% for some longer-term US government bond funds. The Dow was relatively strong with a 3.43% drop.
Once again we’re seeing interest rates decline as the reality of a slow economy and low demand for borrowing trumps fears of government-fueled inflation. Junk bonds performed surprisingly well. Normally, if there is such a thing as “normally” in investing, the boost high yield bonds prices get from lower interest rates during a sliding stock market would be overridden by growing economic fears and expectations for higher defaults in the future on high yield bonds. This is largely why junk bonds did so badly in 2008.
The consensus could now be that the economy won’t grow fast enough to push stocks (or interest rates) up much, but won’t slow enough to increase debt defaults in the economy, a sort of junk bond goldilocks. Our take is that there is too much money going into Junk bonds and that’s a time to be cutting back, as we’ve been doing lately. We prefer the payouts on higher dividend utility and telecom stocks today. While these payouts are not as high as junk bond yields, these stocks are more likely to make the payments if the economy dips anew. They also likely have more stock market like upside from these levels given that high yield bonds are not far off their pre-credit-crisis highs and have outperformed utilities in this recovery.
American Century Utility Income (BULIX) dipped just 1.28% as higher dividend stocks in out of favor categories fell less than the market.
Health Care Select SPDR (XLV) dropped just 1.8% in June, another month during which it was down less than the broad market.
Bill Gross recently moved back into treasuries, and just in time to get a boost. Harbor Bond was up 1.71% in June, a bit better than the total bond markets 1.57% increase, and above Junk Bonds.
Telecom stocks booked another market beating month. Vanguard Telecom ETF (VOX) fell just 1.96%. This fund is still underperforming the S&P 500 over the last year, but that should change soon.
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The Conservative Portfolio dipped -0.32% in June.
In June the market continued downward, with a 5.24% drop in the S&P 500. Small cap stocks were hit harder, off 7.75% for the month (and recently went into officially bear market territory, down 20% from their 2010 peak). The Nasdaq wasn’t much better, falling 6.55%.
At the end of June the S&P 500 was down about 6.66% (yikes!) for the year while our average model portfolio has fallen 2.4%. The strongest areas last month were bonds, with returns for bond funds ranging from 1% to as high as 6% for some longer-term US government bond funds. The Dow was relatively strong with a 3.43% drop.
Once again we’re seeing interest rates decline as the reality of a slow economy and low demand for borrowing trumps fears of government-fueled inflation. Junk bonds performed surprisingly well. Normally, if there is such a thing as “normally” in investing, the boost high yield bonds prices get from lower interest rates during a sliding stock market would be overridden by growing economic fears and expectations for higher defaults in the future on high yield bonds. This is largely why junk bonds did so badly in 2008.
The consensus could now be that the economy won’t grow fast enough to push stocks (or interest rates) up much, but won’t slow enough to increase debt defaults in the economy, a sort of junk bond goldilocks. Our take is that there is too much money going into Junk bonds and that’s a time to be cutting back, as we’ve been doing lately. We prefer the payouts on higher dividend utility and telecom stocks today. While these payouts are not as high as junk bond yields, these stocks are more likely to make the payments if the economy dips anew. They also likely have more stock market like upside from these levels given that high yield bonds are not far off their pre-credit-crisis highs and have outperformed utilities in this recovery.
Bill Gross recently moved back into treasuries, and just in time to get a boost. Harbor Bond was up 1.71% in June, a bit better than the total bond markets 1.57% increase, and above Junk Bonds.
Health Care Select SPDR (XLV) dropped just 1.8% in June, another month during which it was down less than the broad market.
American Century Utility Income (BULIX) dipped just 1.28% as higher dividend stocks in out of favor categories fell less than the market.
Telecom stocks booked another market beating month. Vanguard Telecom ETF (VOX) fell just 1.96%. This fund is still underperforming the S&P 500 over the last year, but that should change soon.
Metropolitan West High Yield Bond (MWHYX) rose 0.77% as ongoing economic fears were not so severe as to panic junk bond investors into forecasts for increasing defaults.
The Aggressive Portfolio dropped -2.02% in June.
In June the market continued downward, with a 5.24% drop in the S&P 500. Small cap stocks were hit harder, off 7.75% for the month (and recently went into officially bear market territory, down 20% from their 2010 peak). The Nasdaq wasn’t much better, falling 6.55%.
At the end of June the S&P 500 was down about 6.66% (yikes!) for the year while our average model portfolio has fallen 2.4%. The strongest areas last month were bonds, with returns for bond funds ranging from 1% to as high as 6% for some longer-term US government bond funds. The Dow was relatively strong with a 3.43% drop.
Once again we’re seeing interest rates decline as the reality of a slow economy and low demand for borrowing trumps fears of government-fueled inflation. Junk bonds performed surprisingly well. Normally, if there is such a thing as “normally” in investing, the boost high yield bonds prices get from lower interest rates during a sliding stock market would be overridden by growing economic fears and expectations for higher defaults in the future on high yield bonds. This is largely why junk bonds did so badly in 2008.
The consensus could now be that the economy won’t grow fast enough to push stocks (or interest rates) up much, but won’t slow enough to increase debt defaults in the economy, a sort of junk bond goldilocks. Our take is that there is too much money going into Junk bonds and that’s a time to be cutting back, as we’ve been doing lately. We prefer the payouts on higher dividend utility and telecom stocks today. While these payouts are not as high as junk bond yields, these stocks are more likely to make the payments if the economy dips anew. They also likely have more stock market like upside from these levels given that high yield bonds are not far off their pre-credit-crisis highs and have outperformed utilities in this recovery.
American Century Utility Income (BULIX) dipped just 1.28% as higher dividend stocks in out of favor categories fell less than the market.
Health Care Select SPDR (XLV) dropped just 1.8% in June, another month during which it was down less than the broad market.
Bill Gross recently moved back into treasuries, and just in time to get a boost. Harbor Bond was up 1.71% in June, a bit better than the total bond markets 1.57% increase, and above Junk Bonds.
Telecom stocks booked another market beating month. Vanguard Telecom ETF (VOX) fell just 1.96%. This fund is still underperforming the S&P 500 over the last year, but that should change soon.