May was the first truly bad month for stocks and higher-risk bonds since the great comeback that started a little over a year ago. The only fund categories that were up, besides funds that short, were municipal bond funds and federal government bond funds. Funny how whenever there is a global panic of any size investors pile into what is supposedly the root of all evil in the economy, fiscally irresponsible governments.
The worst fund categories were foreign stocks and energy. European stocks – the heart of the latest fears – were down just over 11%, while most foreign funds fell around 10% - much of this because of a rising US dollar. Investors probably don’t realize how much a falling US dollar made foreign investments look good over much of the last ten years. Many who piled in during the last decade are now learning what happens when the pendulum swings back. Energy stocks lost the most, with funds in this category down a average of 12.5% in May. Among the ‘looking good by comparison’ areas of the stock market were utilities, real estate, and telecom, each down around 5%.
The S&P 500 dropped 8%, while the Nasdaq slid 8.3%. Long Term Government bonds were up 4.11% as interest rates fell anew. Junk bonds slid hard with a near 4% drop in the high yield bond indexes.
The Powerfund Portfolios had a month almost as bad as the broad US market, with our stock heavy portfolios down between 5% and 7%. Relatively low international exposure kept our performance better than a global stock index which was down about 10% in May despite our exposure to stocks and high yield bonds was a little heavy.
Bill Gross underperformed the total bond index again with a 0.40% gain in the Harbor Bond fund (HABDX) compared to the bond indexes 0.87% total return. In a strange turn of events, Bill Gross did cut back on government bonds too soon and apparently is now buying them back. We don’t second guess our fund manager’s calls on their areas of expertise much but in this case we were right.
Health Care Select SPDR (XLV) dropped 6.51% in May. Healthcare stocks tend to do relatively well during market drops as the stocks are less economically sensitive and usually less leveraged than others in the market.
Telecom stocks were about the best stocks to be in last month with a 4.45% drop for Vanguard Telecom ETF (VOX). Underperformance on the way up is usually a good indicator of outperformance on the way down.
Metropolitan West High Yield Bond (MWHYX) slid 2.93% as global economic fears finally hit high yield bond funds, which have been on quite a run. This fund for example is up 26.69% since we added it 23 months ago, and that includes some initial trouble as we bought it a little too soon in the great credit crisis. We used the recent trade to cut back on junk bonds.
The Aggressive Portfolio fell -6.71% in May.
May was the first truly bad month for stocks and higher-risk bonds since the great comeback that started a little over a year ago. The only fund categories that were up, besides funds that short, were municipal bond funds and federal government bond funds. Funny how whenever there is a global panic of any size investors pile into what is supposedly the root of all evil in the economy, fiscally irresponsible governments.
The worst fund categories were foreign stocks and energy. European stocks – the heart of the latest fears – were down just over 11%, while most foreign funds fell around 10% - much of this because of a rising US dollar. Investors probably don’t realize how much a falling US dollar made foreign investments look good over much of the last ten years. Many who piled in during the last decade are now learning what happens when the pendulum swings back. Energy stocks lost the most, with funds in this category down a average of 12.5% in May. Among the ‘looking good by comparison’ areas of the stock market were utilities, real estate, and telecom, each down around 5%.
The S&P 500 dropped 8%, while the Nasdaq slid 8.3%. Long Term Government bonds were up 4.11% as interest rates fell anew. Junk bonds slid hard with a near 4% drop in the high yield bond indexes.
The Powerfund Portfolios had a month almost as bad as the broad US market, with our stock heavy portfolios down between 5% and 7%. Relatively low international exposure kept our performance better than a global stock index which was down about 10% in May despite our exposure to stocks and high yield bonds was a little heavy.
Health Care Select SPDR (XLV) dropped 6.51% in May. Healthcare stocks tend to do relatively well during market drops as the stocks are less economically sensitive and usually less leveraged than others in the market.
Bill Gross underperformed the total bond index again with a 0.40% gain in the Harbor Bond fund (HABDX) compared to the bond indexes 0.87% total return. In a strange turn of events, Bill Gross did cut back on government bonds too soon and apparently is now buying them back. We don’t second guess our fund manager’s calls on their areas of expertise much but in this case we were right.
Telecom stocks were about the best stocks to be in last month with a 4.45% drop for Vanguard Telecom ETF (VOX). Underperformance on the way up is usually a good indicator of outperformance on the way down.
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The Conservative Portfolio dropped -2.82% in May.
May was the first truly bad month for stocks and higher-risk bonds since the great comeback that started a little over a year ago. The only fund categories that were up, besides funds that short, were municipal bond funds and federal government bond funds. Funny how whenever there is a global panic of any size investors pile into what is supposedly the root of all evil in the economy, fiscally irresponsible governments.
The worst fund categories were foreign stocks and energy. European stocks – the heart of the latest fears – were down just over 11%, while most foreign funds fell around 10% - much of this because of a rising US dollar. Investors probably don’t realize how much a falling US dollar made foreign investments look good over much of the last ten years. Many who piled in during the last decade are now learning what happens when the pendulum swings back. Energy stocks lost the most, with funds in this category down a average of 12.5% in May. Among the ‘looking good by comparison’ areas of the stock market were utilities, real estate, and telecom, each down around 5%.
The S&P 500 dropped 8%, while the Nasdaq slid 8.3%. Long Term Government bonds were up 4.11% as interest rates fell anew. Junk bonds slid hard with a near 4% drop in the high yield bond indexes.
The Powerfund Portfolios had a month almost as bad as the broad US market, with our stock heavy portfolios down between 5% and 7%. Relatively low international exposure kept our performance better than a global stock index which was down about 10% in May despite our exposure to stocks and high yield bonds was a little heavy.
Bill Gross underperformed the total bond index again with a 0.40% gain in the Harbor Bond fund (HABDX) compared to the bond indexes 0.87% total return. In a strange turn of events, Bill Gross did cut back on government bonds too soon and apparently is now buying them back. We don’t second guess our fund manager’s calls on their areas of expertise much but in this case we were right.
Health Care Select SPDR (XLV) dropped 6.51% in May. Healthcare stocks tend to do relatively well during market drops as the stocks are less economically sensitive and usually less leveraged than others in the market.
Telecom stocks were about the best stocks to be in last month with a 4.45% drop for Vanguard Telecom ETF (VOX). Underperformance on the way up is usually a good indicator of outperformance on the way down.
Metropolitan West High Yield Bond (MWHYX) slid 2.93% as global economic fears finally hit high yield bond funds, which have been on quite a run. This fund for example is up 26.69% since we added it 23 months ago, and that includes some initial trouble as we bought it a little too soon in the great credit crisis. We used the recent trade to cut back on junk bonds.
The Aggressive Portfolio fell -6.71% in May.
May was the first truly bad month for stocks and higher-risk bonds since the great comeback that started a little over a year ago. The only fund categories that were up, besides funds that short, were municipal bond funds and federal government bond funds. Funny how whenever there is a global panic of any size investors pile into what is supposedly the root of all evil in the economy, fiscally irresponsible governments.
The worst fund categories were foreign stocks and energy. European stocks – the heart of the latest fears – were down just over 11%, while most foreign funds fell around 10% - much of this because of a rising US dollar. Investors probably don’t realize how much a falling US dollar made foreign investments look good over much of the last ten years. Many who piled in during the last decade are now learning what happens when the pendulum swings back. Energy stocks lost the most, with funds in this category down a average of 12.5% in May. Among the ‘looking good by comparison’ areas of the stock market were utilities, real estate, and telecom, each down around 5%.
The S&P 500 dropped 8%, while the Nasdaq slid 8.3%. Long Term Government bonds were up 4.11% as interest rates fell anew. Junk bonds slid hard with a near 4% drop in the high yield bond indexes.
The Powerfund Portfolios had a month almost as bad as the broad US market, with our stock heavy portfolios down between 5% and 7%. Relatively low international exposure kept our performance better than a global stock index which was down about 10% in May despite our exposure to stocks and high yield bonds was a little heavy.
Health Care Select SPDR (XLV) dropped 6.51% in May. Healthcare stocks tend to do relatively well during market drops as the stocks are less economically sensitive and usually less leveraged than others in the market.
Bill Gross underperformed the total bond index again with a 0.40% gain in the Harbor Bond fund (HABDX) compared to the bond indexes 0.87% total return. In a strange turn of events, Bill Gross did cut back on government bonds too soon and apparently is now buying them back. We don’t second guess our fund manager’s calls on their areas of expertise much but in this case we were right.
Telecom stocks were about the best stocks to be in last month with a 4.45% drop for Vanguard Telecom ETF (VOX). Underperformance on the way up is usually a good indicator of outperformance on the way down.