The market started the month of October by continuing the comeback from the August lows, but by the second week the strength had begun to fizzle. The real trouble (call it mortgage woes v2) didn’t strike until November 1st so for the month of October the Dow eked out a modest 0.38% return. The S&P 500 fared a little better with a 1.58% return, beaten by a big move – which is looking a lot like a last gasp – by small caps stocks, moving up 4.5% for the month. But all indexes pale in comparison to the Nasdaq as investors continue to rediscover the magic of tech and growth stocks – or at least want to get as far away from bank stocks as they possibly can. The Nasdaq 100 index rocketed by just over 7% for the month, while the Nasdaq as a whole gained 5.84%.
Bonds improved on fears of a slowing economy, and general risk aversion by income investors pushed up prices (and lowered yields) of safer government bonds. The total bond market was up about 0.90% while longer term government bonds gained 1.38%.
With bonds and stocks up, the Powerfund Portfolios had no problem keeping pace with the market in October. Our more aggressive portfolios benefited from tech and growth stakes and were up quite a bit more than the S&P 500 or Dow.
The Conservative Portfolio jumped 1.82% in October.
Janus Global Research (JARFX) is performing so we’re getting a little worried - performance chasing investors will soon notice it. We’re keeping a close eye on asset growth, but in general what we expect to happen is that the fund will stop outperforming by quite so much. It’s likely Janus Global Research will begin to move more like an index of global larger cap growth. For October the fund was up 6.34%, making a grand total of 38.09% since we added the fund one year ago. Janus has many hot funds right now as the market has moved back to favoring their types of stocks, but this is about at the top of the list, bested only by a few Janus foreign funds.
October was another month for Bill Gross to beat the benchmarks in bonds with a 1.12% return in Harbor Bond (HABDX). Just when you thought he was having an off year, Gross is back to outgunning most other funds and the index. He appears to be calling for lower yields in one last move down in rates before the economy falls apart. We’re going to keep an eye on him to see how he moves into beaten-down mortgage debt.
The US dollar took another hit, which accelerated into November. American Century Global Bond was up 1.92% and we’re seriously considering dumping our remaining stake here as the falling dollar game is all but over.
Funds that write options benefited from falling premiums, which lowers the value of the options they already sold (a good thing). As the market settled down, option premiums fell. An uptick in fear and volatility will likely lead to more so-so months here, but in October Bridgeway Balanced was up 2.37% and more conservative Gateway was up 1.25%.
Our crummiest stock fund this year is Vanguard U.S. Value, proving that low fees and expert management are not going to save you if you are in the wrong place at the wrong time. We cut back on this fund in some portfolios this year, but perhaps we didn’t cut far enough. Vanguard U.S. Value was up just 0.39% in October, though that was in line with the Dow. The culprit here, and the reason the fund is up just around 5% year-to-date, is mortgage-related financial stocks. Citigroup, Bank of America, Fannie Mae, Merrill Lynch, Freddie Mac – you name it, if it’s a financial stock with mortgage troubles, this fund is in it. Fortunately the other value plays in the portfolio like ExxonMobil are keeping the fund’s head above water. One problem with value investing this year is the best values were in financial stocks – low price-to-earnings ratios and high dividend yields. As we’ve noted before, there was very little value left in value after the big run-up in recent years.
<i>NOTE: We made a mistake calculating our September 2007 performance (shown
in mid October commentary) for the conservative portfolio. The performance
quoted did not reflect the trade we made at the end of August 2007 where we
cut our 5% American Century Long-Short Equity (ALHIX) stake and doubled our
Janus Global Research (JARFX) position from 5% to 10% of entire portfolio. We mistakenly said the performance for the portfolio during September was 1.91%, when in fact the performance was a bit higher, at 2.21%, as Janus Global Research has performed better than the fund that was sold at the end of August.</i>
The market started the month of October by continuing the comeback from the August lows, but by the second week the strength had begun to fizzle. The real trouble (call it mortgage woes v2) didn’t strike until November 1st so for the month of October the Dow eked out a modest 0.38% return. The S&P 500 fared a little better with a 1.58% return, beaten by a big move – which is looking a lot like a last gasp – by small caps stocks, moving up 4.5% for the month. But all indexes pale in comparison to the Nasdaq as investors continue to rediscover the magic of tech and growth stocks – or at least want to get as far away from bank stocks as they possibly can. The Nasdaq 100 index rocketed by just over 7% for the month, while the Nasdaq as a whole gained 5.84%.
Bonds improved on fears of a slowing economy, and general risk aversion by income investors pushed up prices (and lowered yields) of safer government bonds. The total bond market was up about 0.90% while longer term government bonds gained 1.38%.
With bonds and stocks up, the Powerfund Portfolios had no problem keeping pace with the market in October. Our more aggressive portfolios benefited from tech and growth stakes and were up quite a bit more than the S&P 500 or Dow.
The Aggressive Portfolio jumped 2.21% in October.
Janus Global Research (JARFX) is performing so we’re getting a little worried - performance chasing investors will soon notice it. We’re keeping a close eye on asset growth, but in general what we expect to happen is that the fund will stop outperforming by quite so much. It’s likely Janus Global Research will begin to move more like an index of global larger cap growth. For October the fund was up 6.34%, making a grand total of 38.09% since we added the fund one year ago. Janus has many hot funds right now as the market has moved back to favoring their types of stocks, but this is about at the top of the list, bested only by a few Janus foreign funds.
Bridgeway Blue Chip 35 had a mediocre October; up just 0.68% (almost 1% less than the S&P 500, an index this fund has been beating by a bit this year). The fund has a decent sized stake in some mega banks that have been weak lately amidst the mortgage fallout.
October was another month for Bill Gross to beat the benchmarks in bonds with a 1.12% return in Harbor Bond (HABDX). Just when you thought he was having an off year, Gross is back to outgunning most other funds and the index. He appears to be calling for lower yields in one last move down in rates before the economy falls apart. We’re going to keep an eye on him to see how he moves into beaten-down mortgage debt.
Large cap growth stocks remain in top place. Currently, small cap stocks are actually down for the year. Vanguard Growth ETF(VUG) was up 3.24% in October and is up 9.47% over the last three months. This fund’s 16%+ year-to-date return is on a par with the hot Nasdaq.
While we are only back to where we started a few months ago in our hedge fund-like American Century Long Short Equity (ALHIX), the 1% return in October is what you want to see from a fund like this in an up-and-down month. The increased volatility we saw in August was not what you want to see from such a fund.
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The market started the month of October by continuing the comeback from the August lows, but by the second week the strength had begun to fizzle. The real trouble (call it mortgage woes v2) didn’t strike until November 1st so for the month of October the Dow eked out a modest 0.38% return. The S&P 500 fared a little better with a 1.58% return, beaten by a big move – which is looking a lot like a last gasp – by small caps stocks, moving up 4.5% for the month. But all indexes pale in comparison to the Nasdaq as investors continue to rediscover the magic of tech and growth stocks – or at least want to get as far away from bank stocks as they possibly can. The Nasdaq 100 index rocketed by just over 7% for the month, while the Nasdaq as a whole gained 5.84%.
Bonds improved on fears of a slowing economy, and general risk aversion by income investors pushed up prices (and lowered yields) of safer government bonds. The total bond market was up about 0.90% while longer term government bonds gained 1.38%.
With bonds and stocks up, the Powerfund Portfolios had no problem keeping pace with the market in October. Our more aggressive portfolios benefited from tech and growth stakes and were up quite a bit more than the S&P 500 or Dow.
The Conservative Portfolio jumped 1.82% in October.
Janus Global Research (JARFX) is performing so we’re getting a little worried - performance chasing investors will soon notice it. We’re keeping a close eye on asset growth, but in general what we expect to happen is that the fund will stop outperforming by quite so much. It’s likely Janus Global Research will begin to move more like an index of global larger cap growth. For October the fund was up 6.34%, making a grand total of 38.09% since we added the fund one year ago. Janus has many hot funds right now as the market has moved back to favoring their types of stocks, but this is about at the top of the list, bested only by a few Janus foreign funds.
October was another month for Bill Gross to beat the benchmarks in bonds with a 1.12% return in Harbor Bond (HABDX). Just when you thought he was having an off year, Gross is back to outgunning most other funds and the index. He appears to be calling for lower yields in one last move down in rates before the economy falls apart. We’re going to keep an eye on him to see how he moves into beaten-down mortgage debt.
The US dollar took another hit, which accelerated into November. American Century Global Bond was up 1.92% and we’re seriously considering dumping our remaining stake here as the falling dollar game is all but over.
Funds that write options benefited from falling premiums, which lowers the value of the options they already sold (a good thing). As the market settled down, option premiums fell. An uptick in fear and volatility will likely lead to more so-so months here, but in October Bridgeway Balanced was up 2.37% and more conservative Gateway was up 1.25%.
Our crummiest stock fund this year is Vanguard U.S. Value, proving that low fees and expert management are not going to save you if you are in the wrong place at the wrong time. We cut back on this fund in some portfolios this year, but perhaps we didn’t cut far enough. Vanguard U.S. Value was up just 0.39% in October, though that was in line with the Dow. The culprit here, and the reason the fund is up just around 5% year-to-date, is mortgage-related financial stocks. Citigroup, Bank of America, Fannie Mae, Merrill Lynch, Freddie Mac – you name it, if it’s a financial stock with mortgage troubles, this fund is in it. Fortunately the other value plays in the portfolio like ExxonMobil are keeping the fund’s head above water. One problem with value investing this year is the best values were in financial stocks – low price-to-earnings ratios and high dividend yields. As we’ve noted before, there was very little value left in value after the big run-up in recent years.
<i>NOTE: We made a mistake calculating our September 2007 performance (shown
in mid October commentary) for the conservative portfolio. The performance
quoted did not reflect the trade we made at the end of August 2007 where we
cut our 5% American Century Long-Short Equity (ALHIX) stake and doubled our
Janus Global Research (JARFX) position from 5% to 10% of entire portfolio. We mistakenly said the performance for the portfolio during September was 1.91%, when in fact the performance was a bit higher, at 2.21%, as Janus Global Research has performed better than the fund that was sold at the end of August.</i>
The market started the month of October by continuing the comeback from the August lows, but by the second week the strength had begun to fizzle. The real trouble (call it mortgage woes v2) didn’t strike until November 1st so for the month of October the Dow eked out a modest 0.38% return. The S&P 500 fared a little better with a 1.58% return, beaten by a big move – which is looking a lot like a last gasp – by small caps stocks, moving up 4.5% for the month. But all indexes pale in comparison to the Nasdaq as investors continue to rediscover the magic of tech and growth stocks – or at least want to get as far away from bank stocks as they possibly can. The Nasdaq 100 index rocketed by just over 7% for the month, while the Nasdaq as a whole gained 5.84%.
Bonds improved on fears of a slowing economy, and general risk aversion by income investors pushed up prices (and lowered yields) of safer government bonds. The total bond market was up about 0.90% while longer term government bonds gained 1.38%.
With bonds and stocks up, the Powerfund Portfolios had no problem keeping pace with the market in October. Our more aggressive portfolios benefited from tech and growth stakes and were up quite a bit more than the S&P 500 or Dow.
The Aggressive Portfolio jumped 2.21% in October.
Janus Global Research (JARFX) is performing so we’re getting a little worried - performance chasing investors will soon notice it. We’re keeping a close eye on asset growth, but in general what we expect to happen is that the fund will stop outperforming by quite so much. It’s likely Janus Global Research will begin to move more like an index of global larger cap growth. For October the fund was up 6.34%, making a grand total of 38.09% since we added the fund one year ago. Janus has many hot funds right now as the market has moved back to favoring their types of stocks, but this is about at the top of the list, bested only by a few Janus foreign funds.
Bridgeway Blue Chip 35 had a mediocre October; up just 0.68% (almost 1% less than the S&P 500, an index this fund has been beating by a bit this year). The fund has a decent sized stake in some mega banks that have been weak lately amidst the mortgage fallout.
October was another month for Bill Gross to beat the benchmarks in bonds with a 1.12% return in Harbor Bond (HABDX). Just when you thought he was having an off year, Gross is back to outgunning most other funds and the index. He appears to be calling for lower yields in one last move down in rates before the economy falls apart. We’re going to keep an eye on him to see how he moves into beaten-down mortgage debt.
Large cap growth stocks remain in top place. Currently, small cap stocks are actually down for the year. Vanguard Growth ETF(VUG) was up 3.24% in October and is up 9.47% over the last three months. This fund’s 16%+ year-to-date return is on a par with the hot Nasdaq.
While we are only back to where we started a few months ago in our hedge fund-like American Century Long Short Equity (ALHIX), the 1% return in October is what you want to see from a fund like this in an up-and-down month. The increased volatility we saw in August was not what you want to see from such a fund.