The Conservative Portfolio rose 1.56% in December.
December was just like the rest of 2009 after last spring's turnaround: up. The S&P 500 rose 1.95% while the Dow gained just under 1%. For the year the S&P 500 (with dividends) was up around 26.5% and has now ‘only’ about 35% more to go to hit the highs of 2007.
The real action in US indexes remained in tech stocks, with the Nasdaq climbing 5.81%. Small cap stocks delivered an 8.05% rise. As investors continued to pile into risky assets, they also continued to run from safer bonds. The total bond market slid 1.56% while longer-term treasury bonds dropped 5.63%, leading to a total return for the year of negative 13%. Not all bonds were down. High yield ‘junk’ bonds were up around 3.28% for the month, which means the gap in yields between high risk and low risk debt got even closer and hence the investor taking risks today is not being rewarded as much as earlier in the year. Of course, the risk of defaults on junk bonds is down somewhat as the economy appears to be avoiding true calamity. In many cases high yield bonds are more expensive than they were during the peak of the credit boom.
While there are plenty of things we wished we did a little differently in 2009, all-in-all we’re quite happy with our returns. Our five core risk level portfolios (not including Daredevil and Low Minimum) are all at all time highs.
Normally when the S&P 500 goes pretty much straight up in a short period of time, as it has since the early March lows, we would expect to underperform because our portfolios tend to have some bonds or cash weighting them down, a performance gap we tend to makeup during the next downturn or as our out-of-favor funds start to beat the market. In 2009 four of our five core model portfolios beat the S&P 500 anyway, largely because of good fund selection and a timely increase of our stock allocation within just a few days of the market bottom.
The Aggressive Portfolio jumped 2.92% in December.
December was just like the rest of 2009 after last spring's turnaround: up. The S&P 500 rose 1.95% while the Dow gained just under 1%. For the year the S&P 500 (with dividends) was up around 26.5% and has now ‘only’ about 35% more to go to hit the highs of 2007.
The real action in US indexes remained in tech stocks, with the Nasdaq climbing 5.81%. Small cap stocks delivered an 8.05% rise. As investors continued to pile into risky assets, they also continued to run from safer bonds. The total bond market slid 1.56% while longer-term treasury bonds dropped 5.63%, leading to a total return for the year of negative 13%. Not all bonds were down. High yield ‘junk’ bonds were up around 3.28% for the month, which means the gap in yields between high risk and low risk debt got even closer and hence the investor taking risks today is not being rewarded as much as earlier in the year. Of course, the risk of defaults on junk bonds is down somewhat as the economy appears to be avoiding true calamity. In many cases high yield bonds are more expensive than they were during the peak of the credit boom.
While there are plenty of things we wished we did a little differently in 2009, all-in-all we’re quite happy with our returns. Our five core risk level portfolios (not including Daredevil and Low Minimum) are all at all time highs.
Normally when the S&P 500 goes pretty much straight up in a short period of time, as it has since the early March lows, we would expect to underperform because our portfolios tend to have some bonds or cash weighting them down, a performance gap we tend to makeup during the next downturn or as our out-of-favor funds start to beat the market. In 2009 four of our five core model portfolios beat the S&P 500 anyway, largely because of good fund selection and a timely increase of our stock allocation within just a few days of the market bottom.
As for mistakes, we cut back a little too early, misjudging how quickly investors would be comfortable taking on risks once again. Still, we were in some of the best performing funds for the year, even if some of our holding periods were abbreviated. RSX, the Russian stock ETF, which we bought near the market bottom in our Daredevil portfolio, was the 3rd best performing unleveraged stock fund in 2009. Other trades, like our brief foray into XLF the financial sector SPDR ETF in four of our model portfolios, worked out timing wise, as we earned just under 60% in the four months we owned the fund (even though we got out a little early). For the year the ETF was up 17.5%.
Biotech stocks continued a comeback with a 6.92% return in December, just enough to eek out a positive return for the year of just 0.34% in our SPDR Biotech (XBI) ETF. While 2009 has been a disappointment, the fund whipped the S&P 500 over the last three years with big outperformance in 2007 and 2008.
The Vanguard Growth ETF (VUG) continued to outperform the market in 2009 with a 3.32% return in December. The growth and tech stock heavy ETF beat the market by a country mile in 2009 with a 36.12% return for the year. We’re going to use the unofficial definition of a ‘country mile’ to be more than ten percentage points of outperformance.
Telecom stocks are now officially in play with speculators. What was an out of favor, low volatility sector has become as volatile as more speculative areas. Vanguard Telecom Service ETF (VOX) was up 7.76% for the month, and closed the year out with a 29/46% gain, more than the S&P 500 on both counts.
As for mistakes, we cut back a little too early, misjudging how quickly investors would be comfortable taking on risks once again. Still, we were in some of the best performing funds for the year, even if some of our holding periods were abbreviated. RSX, the Russian stock ETF, which we bought near the market bottom in our Daredevil portfolio, was the 3rd best performing unleveraged stock fund in 2009. Other trades, like our brief foray into XLF the financial sector SPDR ETF in four of our model portfolios, worked out timing wise, as we earned just under 60% in the four months we owned the fund (even though we got out a little early). For the year the ETF was up 17.5%.
The Vanguard Growth ETF (VUG) continued to outperform the market in 2009 with a 3.32% return in December. The growth and tech stock heavy ETF beat the market by a country mile in 2009 with a 36.12% return for the year. We’re going to use the unofficial definition of a ‘country mile’ to be more than ten percentage points of outperformance.
Telecom stocks are now officially in play with speculators. What was an out of favor, low volatility sector has become as volatile as more speculative areas. Vanguard Telecom Service ETF (VOX) was up 7.76% for the month, and closed the year out with a 29/46% gain, more than the S&P 500 on both counts.
The great junk bond rally won’t die. Metropolitan West High Yield Bond (MWHYX) was up 3.28% in December, and – get ready – 54.75% for the year, more than double the S&P 500.
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The Conservative Portfolio rose 1.56% in December.
December was just like the rest of 2009 after last spring's turnaround: up. The S&P 500 rose 1.95% while the Dow gained just under 1%. For the year the S&P 500 (with dividends) was up around 26.5% and has now ‘only’ about 35% more to go to hit the highs of 2007.
The real action in US indexes remained in tech stocks, with the Nasdaq climbing 5.81%. Small cap stocks delivered an 8.05% rise. As investors continued to pile into risky assets, they also continued to run from safer bonds. The total bond market slid 1.56% while longer-term treasury bonds dropped 5.63%, leading to a total return for the year of negative 13%. Not all bonds were down. High yield ‘junk’ bonds were up around 3.28% for the month, which means the gap in yields between high risk and low risk debt got even closer and hence the investor taking risks today is not being rewarded as much as earlier in the year. Of course, the risk of defaults on junk bonds is down somewhat as the economy appears to be avoiding true calamity. In many cases high yield bonds are more expensive than they were during the peak of the credit boom.
While there are plenty of things we wished we did a little differently in 2009, all-in-all we’re quite happy with our returns. Our five core risk level portfolios (not including Daredevil and Low Minimum) are all at all time highs.
Normally when the S&P 500 goes pretty much straight up in a short period of time, as it has since the early March lows, we would expect to underperform because our portfolios tend to have some bonds or cash weighting them down, a performance gap we tend to makeup during the next downturn or as our out-of-favor funds start to beat the market. In 2009 four of our five core model portfolios beat the S&P 500 anyway, largely because of good fund selection and a timely increase of our stock allocation within just a few days of the market bottom.
The Aggressive Portfolio jumped 2.92% in December.
December was just like the rest of 2009 after last spring's turnaround: up. The S&P 500 rose 1.95% while the Dow gained just under 1%. For the year the S&P 500 (with dividends) was up around 26.5% and has now ‘only’ about 35% more to go to hit the highs of 2007.
The real action in US indexes remained in tech stocks, with the Nasdaq climbing 5.81%. Small cap stocks delivered an 8.05% rise. As investors continued to pile into risky assets, they also continued to run from safer bonds. The total bond market slid 1.56% while longer-term treasury bonds dropped 5.63%, leading to a total return for the year of negative 13%. Not all bonds were down. High yield ‘junk’ bonds were up around 3.28% for the month, which means the gap in yields between high risk and low risk debt got even closer and hence the investor taking risks today is not being rewarded as much as earlier in the year. Of course, the risk of defaults on junk bonds is down somewhat as the economy appears to be avoiding true calamity. In many cases high yield bonds are more expensive than they were during the peak of the credit boom.
While there are plenty of things we wished we did a little differently in 2009, all-in-all we’re quite happy with our returns. Our five core risk level portfolios (not including Daredevil and Low Minimum) are all at all time highs.
Normally when the S&P 500 goes pretty much straight up in a short period of time, as it has since the early March lows, we would expect to underperform because our portfolios tend to have some bonds or cash weighting them down, a performance gap we tend to makeup during the next downturn or as our out-of-favor funds start to beat the market. In 2009 four of our five core model portfolios beat the S&P 500 anyway, largely because of good fund selection and a timely increase of our stock allocation within just a few days of the market bottom.
As for mistakes, we cut back a little too early, misjudging how quickly investors would be comfortable taking on risks once again. Still, we were in some of the best performing funds for the year, even if some of our holding periods were abbreviated. RSX, the Russian stock ETF, which we bought near the market bottom in our Daredevil portfolio, was the 3rd best performing unleveraged stock fund in 2009. Other trades, like our brief foray into XLF the financial sector SPDR ETF in four of our model portfolios, worked out timing wise, as we earned just under 60% in the four months we owned the fund (even though we got out a little early). For the year the ETF was up 17.5%.
Biotech stocks continued a comeback with a 6.92% return in December, just enough to eek out a positive return for the year of just 0.34% in our SPDR Biotech (XBI) ETF. While 2009 has been a disappointment, the fund whipped the S&P 500 over the last three years with big outperformance in 2007 and 2008.
The Vanguard Growth ETF (VUG) continued to outperform the market in 2009 with a 3.32% return in December. The growth and tech stock heavy ETF beat the market by a country mile in 2009 with a 36.12% return for the year. We’re going to use the unofficial definition of a ‘country mile’ to be more than ten percentage points of outperformance.
Telecom stocks are now officially in play with speculators. What was an out of favor, low volatility sector has become as volatile as more speculative areas. Vanguard Telecom Service ETF (VOX) was up 7.76% for the month, and closed the year out with a 29/46% gain, more than the S&P 500 on both counts.
As for mistakes, we cut back a little too early, misjudging how quickly investors would be comfortable taking on risks once again. Still, we were in some of the best performing funds for the year, even if some of our holding periods were abbreviated. RSX, the Russian stock ETF, which we bought near the market bottom in our Daredevil portfolio, was the 3rd best performing unleveraged stock fund in 2009. Other trades, like our brief foray into XLF the financial sector SPDR ETF in four of our model portfolios, worked out timing wise, as we earned just under 60% in the four months we owned the fund (even though we got out a little early). For the year the ETF was up 17.5%.
The Vanguard Growth ETF (VUG) continued to outperform the market in 2009 with a 3.32% return in December. The growth and tech stock heavy ETF beat the market by a country mile in 2009 with a 36.12% return for the year. We’re going to use the unofficial definition of a ‘country mile’ to be more than ten percentage points of outperformance.
Telecom stocks are now officially in play with speculators. What was an out of favor, low volatility sector has become as volatile as more speculative areas. Vanguard Telecom Service ETF (VOX) was up 7.76% for the month, and closed the year out with a 29/46% gain, more than the S&P 500 on both counts.
The great junk bond rally won’t die. Metropolitan West High Yield Bond (MWHYX) was up 3.28% in December, and – get ready – 54.75% for the year, more than double the S&P 500.