The Conservative Portfolio climbed 0.29% in November.
Earlier this year, we cut back on our stock holdings and increased our longer-term bond stake. Since then, stocks have been hit hard (but have come back more than once), and interest rates on the ten-year government bond have fallen below 4% (down from well over 5% - the prevailing rate when we planned our last trade). Since rates have been ticking up recently based upon inflation fears, we’re not going to cut back significantly on our bonds across the portfolios quite yet, but we may do so in the coming months.
Stocks slipped steeply in November, but bonds rose as investors piled into safer investments. The S&P 500 dropped 4.2%, while the Nasdaq fell 6.62%, and the Russell 2000 smaller-cap index sunk 6.91%. Longer-term bonds climbed 4.4% in November, and none of our portfolios dropped more than 1%. So far this year, all of our portfolios are beating the S&P 500.
We're making trades in the Conservative portfolio, effective December 31st, 2007:
<b>Sales</b>
• <b>Sell entire</b> international bond allocation: American Century Intl. Bond (BEGBX) from 5% to 0%
<b>Buys:</b>
• <b>Buy new</b> short allocation: Nakoma Absolute Return (NARFX) to 5%
<b>Why:</b>
Though we'll miss the diversification American Century Global Bond (BEGBX) offers, we're officially positive on the U.S. dollar, and are selling all of our remaining positions in this long-term holding . American Century Global Bond Fund has risen over 70% since we first added it. We expect 2008 to be a great year for the greenback, and growing excitement toward investing abroad should wane to boot.
Although long-term investors could easily make a strong case for some foreign bond allocation as a hedge against weakness in the U.S. dollar, we know that our dollar is not going to fall forever. This whole "U.S. dollar is falling" trade has become far too popular, and fund investors have been going gaga over all things foreign for the last few years. We think there's a very good chance that December 2007 will represent rock-bottom for the dollar. Maybe we’re a bit early, but there are certainly better places for your money than foreign bonds right now. For those of you who've been with us since we first purchased American Century International Bond, and are now up over 70% in this fund, consider selling in early January to delay the tax liability (IRA investors can ignore this advice).
As for its replacement, we’ve been searching for a decent fund that goes both long and short. In a volatile stock market with minimal upside and low cash and bond yields, long-short funds could be an ideal choice. Unfortunately, most long-short funds are too expensive, and many are mediocre performers at best. Not including shorting costs, Nakoma Absolute Return (NARFX) is a bit expensive to own, with a 1.99 % expense ratio (expense limited). However, it has performed remarkably well at a very low risk level this year, even dodging the great short panic that killed so many long-short funds in August (including one we own, although it has come back since then).
This fund can be purchased without a transaction fee at Schwab and with a transaction fee at E*Trade, Scottrade, and TD Ameritrade (not available at Firstrade). Some brokers also sell it, and you can purchase it directly from the fund company with as little as a $1,000 minimum investment – quite a rare treat in this category.
<b>Redemption Fee Information:</b>
There are no short-term redemption fees associated with this sale. Your broker may charge a fee or commission.
The Aggressive Growth Portfolio dipped -0.98% in November.
Earlier this year, we cut back on our stock holdings and increased our longer-term bond stake. Since then, stocks have been hit hard (but have come back more than once), and interest rates on the ten-year government bond have fallen below 4% (down from well over 5% - the prevailing rate when we planned our last trade). Since rates have been ticking up recently based upon inflation fears, we’re not going to cut back significantly on our bonds across the portfolios quite yet, but we may do so in the coming months.
We're making trades in the Aggressive Growth portfolio, effective December 31st, 2007:
<b>Sales</b>
• <b>Sell entire</b> short allocation: American Century Long-Short Equity (ALHIX) from 5% to 0%
<b>Buys:</b>
• <b>Buy new</b> short allocation: Nakoma Absolute Return (NARFX) to 5%
<b>Why:</b>
We’ve been diligently searching for a decent fund that goes both long and short. In a volatile stock market with minimal upside and low cash and bond yields, long-short funds could be an ideal choice. Unfortunately, most long-short funds are too expensive, and many are mediocre performers at best. Not including shorting costs, Nakoma Absolute Return (NARFX) is a bit expensive to own, with a 1.99 % expense ratio (expense limited). However, it has performed remarkably well at a very low risk level this year, even dodging the great short panic that killed so many long-short funds in August (including one we own, although it has come back since then). In addition to the drop earlier this year, ALHIX has closed to new investors, and frankly, it was never that easy to buy anyway
This fund can be purchased without a transaction fee at Schwab and with a transaction fee at E*Trade, Scottrade, and TD Ameritrade (not available at Firstrade). Some brokers also sell it, and you can purchase it directly from the fund company directly with as little as a $1,000 minimum investment – quite a rare treat in this category.
Nakoma is paying a small $0.085 per share ordinary income dividend to shareholders of record on 12/27, and American Century Long-Short Equity is paying a small $0.17 per share ordinary income dividend to shareholders of record on 12/27, so ideally you’d sell ALHIX on or before the 27th, and buy Nakoma after the 27th.
<b>Redemption Fee Information:</b>
There are no short-term redemption fees associated with this sale. Your broker may charge a fee or commission.
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The Conservative Portfolio climbed 0.29% in November.
Earlier this year, we cut back on our stock holdings and increased our longer-term bond stake. Since then, stocks have been hit hard (but have come back more than once), and interest rates on the ten-year government bond have fallen below 4% (down from well over 5% - the prevailing rate when we planned our last trade). Since rates have been ticking up recently based upon inflation fears, we’re not going to cut back significantly on our bonds across the portfolios quite yet, but we may do so in the coming months.
Stocks slipped steeply in November, but bonds rose as investors piled into safer investments. The S&P 500 dropped 4.2%, while the Nasdaq fell 6.62%, and the Russell 2000 smaller-cap index sunk 6.91%. Longer-term bonds climbed 4.4% in November, and none of our portfolios dropped more than 1%. So far this year, all of our portfolios are beating the S&P 500.
We're making trades in the Conservative portfolio, effective December 31st, 2007:
<b>Sales</b>
• <b>Sell entire</b> international bond allocation: American Century Intl. Bond (BEGBX) from 5% to 0%
<b>Buys:</b>
• <b>Buy new</b> short allocation: Nakoma Absolute Return (NARFX) to 5%
<b>Why:</b>
Though we'll miss the diversification American Century Global Bond (BEGBX) offers, we're officially positive on the U.S. dollar, and are selling all of our remaining positions in this long-term holding . American Century Global Bond Fund has risen over 70% since we first added it. We expect 2008 to be a great year for the greenback, and growing excitement toward investing abroad should wane to boot.
Although long-term investors could easily make a strong case for some foreign bond allocation as a hedge against weakness in the U.S. dollar, we know that our dollar is not going to fall forever. This whole "U.S. dollar is falling" trade has become far too popular, and fund investors have been going gaga over all things foreign for the last few years. We think there's a very good chance that December 2007 will represent rock-bottom for the dollar. Maybe we’re a bit early, but there are certainly better places for your money than foreign bonds right now. For those of you who've been with us since we first purchased American Century International Bond, and are now up over 70% in this fund, consider selling in early January to delay the tax liability (IRA investors can ignore this advice).
As for its replacement, we’ve been searching for a decent fund that goes both long and short. In a volatile stock market with minimal upside and low cash and bond yields, long-short funds could be an ideal choice. Unfortunately, most long-short funds are too expensive, and many are mediocre performers at best. Not including shorting costs, Nakoma Absolute Return (NARFX) is a bit expensive to own, with a 1.99 % expense ratio (expense limited). However, it has performed remarkably well at a very low risk level this year, even dodging the great short panic that killed so many long-short funds in August (including one we own, although it has come back since then).
This fund can be purchased without a transaction fee at Schwab and with a transaction fee at E*Trade, Scottrade, and TD Ameritrade (not available at Firstrade). Some brokers also sell it, and you can purchase it directly from the fund company with as little as a $1,000 minimum investment – quite a rare treat in this category.
<b>Redemption Fee Information:</b>
There are no short-term redemption fees associated with this sale. Your broker may charge a fee or commission.
The Aggressive Growth Portfolio dipped -0.98% in November.
Earlier this year, we cut back on our stock holdings and increased our longer-term bond stake. Since then, stocks have been hit hard (but have come back more than once), and interest rates on the ten-year government bond have fallen below 4% (down from well over 5% - the prevailing rate when we planned our last trade). Since rates have been ticking up recently based upon inflation fears, we’re not going to cut back significantly on our bonds across the portfolios quite yet, but we may do so in the coming months.
We're making trades in the Aggressive Growth portfolio, effective December 31st, 2007:
<b>Sales</b>
• <b>Sell entire</b> short allocation: American Century Long-Short Equity (ALHIX) from 5% to 0%
<b>Buys:</b>
• <b>Buy new</b> short allocation: Nakoma Absolute Return (NARFX) to 5%
<b>Why:</b>
We’ve been diligently searching for a decent fund that goes both long and short. In a volatile stock market with minimal upside and low cash and bond yields, long-short funds could be an ideal choice. Unfortunately, most long-short funds are too expensive, and many are mediocre performers at best. Not including shorting costs, Nakoma Absolute Return (NARFX) is a bit expensive to own, with a 1.99 % expense ratio (expense limited). However, it has performed remarkably well at a very low risk level this year, even dodging the great short panic that killed so many long-short funds in August (including one we own, although it has come back since then). In addition to the drop earlier this year, ALHIX has closed to new investors, and frankly, it was never that easy to buy anyway
This fund can be purchased without a transaction fee at Schwab and with a transaction fee at E*Trade, Scottrade, and TD Ameritrade (not available at Firstrade). Some brokers also sell it, and you can purchase it directly from the fund company directly with as little as a $1,000 minimum investment – quite a rare treat in this category.
Nakoma is paying a small $0.085 per share ordinary income dividend to shareholders of record on 12/27, and American Century Long-Short Equity is paying a small $0.17 per share ordinary income dividend to shareholders of record on 12/27, so ideally you’d sell ALHIX on or before the 27th, and buy Nakoma after the 27th.
<b>Redemption Fee Information:</b>
There are no short-term redemption fees associated with this sale. Your broker may charge a fee or commission.