August came in like a lion and went out like a lamb. Miraculously the stock market recovered early losses – not all the losses from July, but the losses from early August. At the end, the S&P 500 was up 1.5% for the month, just outpacing the Dow’s 1.4% return. The real action was in tech stocks, with the NASDAQ up 3%. Even small cap stocks came back (though are still underperforming over the last year) with a 2.52% gain in the Russell 2000 small cap index.
The gains weren’t limited to socks. Longer term bonds scored a 2% return as fears about the economy and general risk aversion boosted bond prices. Even junk bonds rallied as fears refocused on mortgage backed debt.
In such an environment, it was hard to lose money. All of our model portfolios were up for the month, with returns in the 1 – 2% range.
The Conservative Portfolio climbed 0.99% in August.
Healthcare stocks performed well in the tumultuous month. Investors sought the safety of big cap healthcare names, which helped our Healthcare SPDR (XLV) rise 2.52%.
August came in like a lion and went out like a lamb. Miraculously the stock market recovered early losses – not all the losses from July, but the losses from early August. At the end, the S&P 500 was up 1.5% for the month, just outpacing the Dow’s 1.4% return. The real action was in tech stocks, with the NASDAQ up 3%. Even small cap stocks came back (though are still underperforming over the last year) with a 2.52% gain in the Russell 2000 small cap index.
The gains weren’t limited to socks. Longer term bonds scored a 2% return as fears about the economy and general risk aversion boosted bond prices. Even junk bonds rallied as fears refocused on mortgage backed debt.
In such an environment, it was hard to lose money. All of our model portfolios were up for the month, with returns in the 1 – 2% range.
The Aggressive Portfolio jumped 2.08% in August
Other than SSgA Yield Plus (SSYPX), our 2nd worst performer in August was American Century Long Short Equity (ALHIX). This in a month where you would expect shorting stocks would help returns – not hurt. The fund fell 3.34% for the month, but that disguises the really sharp one day drop we saw early in the month, which the fund has largely recovered from. Apparently so many hedge funds are following a similar quantitative strategy that when the market went haywire in early August, heavily shorted stocks took off - even though the market fell. This fund took it on the chin as the worst of both worlds for a market neutral fund took place: the shorts rose in price, the longs fell. We cut this fund from our conservative portfolio at the end of August as this is more market risk than we currently want in one of our lower risk portfolios.
We’re glad we moved into longer term bonds when the ten year government bond was yielding over 5% because the recent fall in interest rates has helped our returns (compared to shorter term bonds but especially compared to stocks). Vanguard Intermediate Bond Index (VBIIX) delivered a 1.71% return in August.
Bridgeway Blue Chip 35 (BRLIX) scored an impressive 2.86% return – nearly double the S&P 500 - as big cap and tech lead the markets in August.
Healthcare stocks performed well in the tumultuous month. Investors sought the safety of big cap healthcare names, which helped our Healthcare SPDR (XLV) rise 2.52%.
SPDR Biotech (XBI) delivered a surprising 10.26% return in a month in which most investors shunned risk. Our theory is some money is always going to seek high risk high return investments, and to that money biotech stocks are looking better than other formerly hot higher risk areas like emerging market stocks and bonds.
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August came in like a lion and went out like a lamb. Miraculously the stock market recovered early losses – not all the losses from July, but the losses from early August. At the end, the S&P 500 was up 1.5% for the month, just outpacing the Dow’s 1.4% return. The real action was in tech stocks, with the NASDAQ up 3%. Even small cap stocks came back (though are still underperforming over the last year) with a 2.52% gain in the Russell 2000 small cap index.
The gains weren’t limited to socks. Longer term bonds scored a 2% return as fears about the economy and general risk aversion boosted bond prices. Even junk bonds rallied as fears refocused on mortgage backed debt.
In such an environment, it was hard to lose money. All of our model portfolios were up for the month, with returns in the 1 – 2% range.
The Conservative Portfolio climbed 0.99% in August.
Healthcare stocks performed well in the tumultuous month. Investors sought the safety of big cap healthcare names, which helped our Healthcare SPDR (XLV) rise 2.52%.
August came in like a lion and went out like a lamb. Miraculously the stock market recovered early losses – not all the losses from July, but the losses from early August. At the end, the S&P 500 was up 1.5% for the month, just outpacing the Dow’s 1.4% return. The real action was in tech stocks, with the NASDAQ up 3%. Even small cap stocks came back (though are still underperforming over the last year) with a 2.52% gain in the Russell 2000 small cap index.
The gains weren’t limited to socks. Longer term bonds scored a 2% return as fears about the economy and general risk aversion boosted bond prices. Even junk bonds rallied as fears refocused on mortgage backed debt.
In such an environment, it was hard to lose money. All of our model portfolios were up for the month, with returns in the 1 – 2% range.
The Aggressive Portfolio jumped 2.08% in August
Other than SSgA Yield Plus (SSYPX), our 2nd worst performer in August was American Century Long Short Equity (ALHIX). This in a month where you would expect shorting stocks would help returns – not hurt. The fund fell 3.34% for the month, but that disguises the really sharp one day drop we saw early in the month, which the fund has largely recovered from. Apparently so many hedge funds are following a similar quantitative strategy that when the market went haywire in early August, heavily shorted stocks took off - even though the market fell. This fund took it on the chin as the worst of both worlds for a market neutral fund took place: the shorts rose in price, the longs fell. We cut this fund from our conservative portfolio at the end of August as this is more market risk than we currently want in one of our lower risk portfolios.
We’re glad we moved into longer term bonds when the ten year government bond was yielding over 5% because the recent fall in interest rates has helped our returns (compared to shorter term bonds but especially compared to stocks). Vanguard Intermediate Bond Index (VBIIX) delivered a 1.71% return in August.
Bridgeway Blue Chip 35 (BRLIX) scored an impressive 2.86% return – nearly double the S&P 500 - as big cap and tech lead the markets in August.
Healthcare stocks performed well in the tumultuous month. Investors sought the safety of big cap healthcare names, which helped our Healthcare SPDR (XLV) rise 2.52%.
SPDR Biotech (XBI) delivered a surprising 10.26% return in a month in which most investors shunned risk. Our theory is some money is always going to seek high risk high return investments, and to that money biotech stocks are looking better than other formerly hot higher risk areas like emerging market stocks and bonds.