A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Vanguard Telecom Service ETF (VOX) barely participated in the recent run in stocks with a mere 2.39% gain in July. This out-of-favor area has not been as appealing as health care but was very hot earlier in the year (and is still up more than the market for 2009). Recent underperformance here is not so much because conservative stocks are lagging, which they are, but over concerns telecom companies are not going to do well in the rebound.
Junk bonds continued to climb, and Metropolitan West High Yield Bond (MWHYX) was up 5.03% last month. We’ll likely cut back our high-yield exposure soon.
The Aggressive Portfolio jumped 5.88% in July.
A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Just when you write off biotech, the sector comes roaring back. July saw our SPDR Biotech (XBI) ETF rise 9.06%. – That’s a 22.02% gain for the last three months, despite weakness in the first part of 2009. In fact the fund is still under the market’s return for the year. SPDR Biotech is now around a half billion in assets, more than when we bought it but still within reasonable asset levels. Biotech has been discovered by some momentum investors, but not the fund buying public at large.
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The Conservative Portfolio jumped 3.02% in July.
A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Vanguard Telecom Service ETF (VOX) barely participated in the recent run in stocks with a mere 2.39% gain in July. This out-of-favor area has not been as appealing as health care but was very hot earlier in the year (and is still up more than the market for 2009). Recent underperformance here is not so much because conservative stocks are lagging, which they are, but over concerns telecom companies are not going to do well in the rebound.
Junk bonds continued to climb, and Metropolitan West High Yield Bond (MWHYX) was up 5.03% last month. We’ll likely cut back our high-yield exposure soon.
The Aggressive Portfolio jumped 5.88% in July.
A listless June was quickly forgotten thanks to a hot July. The S&P 500 was up 7.58% last month with similar gains in other stock indexes. The Dow climbed 8.75%, the Nasdaq gained 7.82% and smaller-cap stocks rose 9.63%. Treasury bonds returned 0.77% as any interest rate increases turned out to be temporary. Oddly, investors seem pretty confident the economy is turning around, yet don’t seem to think interest rates are going to take off any time soon, hence the low rates on Treasury bonds.
Lower-quality bonds continued to perform well, with the aggregate bond market, which includes corporate and mortgage debt, outperforming longer-term government bonds with a 1.61% return for the month. Riskier high-yield bonds rose the most with a 6% gain in July.
But the damage done to stocks last year has not been undone. Indexes are still down over 30% from highs, though the S&P 500 is up nicely for the year, posting an11% return for 2009. The damage done to higher risk bonds last year has largely been reversed, and we have been winding down our increased stakes in junk bonds – something we will do in stocks if they recover more of their losses.
All of the Powerfund Portfolios are ahead of the S&P 500 this year except for Daredevil which is up just 10.2% after some disappointing performance from our speculative inverse hedges – the dangerous leveraged inverse ETFs. Our Conservative, Growth, and Aggressive Growth portfolios are up almost double the markets returns (all up between 19% and 20%) in 2009, despite relatively significant bond allocations. These three portfolios were down less than half the markets drop in 2008. Half on the way down, double on the way up – that’s about as good as it gets in investing.
Nakoma Absolute Return (NARFX) had a lousy month with a negative 3.15% return in a July and is now down 5.08% for the year. This fund has had trouble adjusting to the new hot market. The fund is actually getting quite a bit larger at around a quarter billion in assets as investors are flocking to the only long-short funds that aren’t clearly bad choices.
Health Care Select SPDR (XLV) underperformed the market with a 5.93% rise in July, but has done well in recent months compared to the market after a slow start earlier in the year. Side note: 2008 was great relative to the market. All this in the face of concerns over a looking government overhaul of health care.
Just when you write off biotech, the sector comes roaring back. July saw our SPDR Biotech (XBI) ETF rise 9.06%. – That’s a 22.02% gain for the last three months, despite weakness in the first part of 2009. In fact the fund is still under the market’s return for the year. SPDR Biotech is now around a half billion in assets, more than when we bought it but still within reasonable asset levels. Biotech has been discovered by some momentum investors, but not the fund buying public at large.