Stocks took a bit of a breather in June. The S&P 500 slipped 1.66%, and the Dow dropped 1.49%. Considering the strength of stocks earlier in the year, this is not much of a pullback. Small cap stocks, which have been underperforming slightly in recent months, were down just 0.57% in June. Surprisingly, tech stocks bucked the trend (the typical tech sector fund was up about 1%) and were, for the most part, up slightly in June, despite the fact that the NASDAQ as a whole fell 0.05%.
Bonds dipped as interest rates rose sharply to over 5.25% on the ten-year government bond, but then recovered late in June as interest rates fell. The real trouble in bonds was on the junk side of the market. High yield bonds fell 2-3% for the month as investors seem to have finally started thinking that they have been underestimating risk in credit and overpaying for many types of higher yield securities. What was good for high-yield bonds was bad for Real Estate Investment Trusts (REITs) and Utility stocks, which were down about 10% and 5% in June respectively.
Fund investors aren’t as optimistic as they could be, and the economy appears to be slowing but sound even though housing shows no signs of recovering. Investor optimism plus the massive amount of capital available to buy stock and bonds should keep stock declines from reaching critical mass. We still think easing up on some stock funds is the right move now.
The Conservative Portfolio dipped -0.61% in June
Just about any investment bought primarily for yield was killed in June. Part of the reason for this was a rise in interest rates, but the real trouble was a sinking sensation that these higher-risk yield-oriented investments have risen too far. Vanguard High Yield Corporate (VWEHX) fell an eyebrow-raising 2.27%, but the real trouble was in yield-oriented equities like utilities.
Short-term bonds were about the best place to be in June. Vanguard Short-Term Investment Grade (VFSTX) was up 0.21% last month, among our highest performers after ultra-short bond funds and funds that use options to generate income. This is a good time to pare down on shorter term bond funds and bring in some longer term bond funds.
Healthcare’s nice run of beating the market ended with a 3.52% drop in our Health Care SPDR (XLV) ETF.
Janus Global Research (JARFX) had its worst month since last November when we added it to some of our portfolios. However, the 1.46% drop is a smaller percentage drop than the S&P 500 saw in June and continues this funds market-beating streak. A good chunk of this outperformance is simply because international stocks did well recently in comparison to the S&P 500.
Stocks took a bit of a breather in June. The S&P 500 slipped 1.66%, and the Dow dropped 1.49%. Considering the strength of stocks earlier in the year, this is not much of a pullback. Small cap stocks, which have been underperforming slightly in recent months, were down just 0.57% in June. Surprisingly, tech stocks bucked the trend (the typical tech sector fund was up about 1%) and were, for the most part, up slightly in June, despite the fact that the NASDAQ as a whole fell 0.05%.
Bonds dipped as interest rates rose sharply to over 5.25% on the ten-year government bond, but then recovered late in June as interest rates fell. The real trouble in bonds was on the junk side of the market. High yield bonds fell 2-3% for the month as investors seem to have finally started thinking that they have been underestimating risk in credit and overpaying for many types of higher yield securities. What was good for high-yield bonds was bad for Real Estate Investment Trusts (REITs) and Utility stocks, which were down about 10% and 5% in June respectively.
Fund investors aren’t as optimistic as they could be, and the economy appears to be slowing but sound even though housing shows no signs of recovering. Investor optimism plus the massive amount of capital available to buy stock and bonds should keep stock declines from reaching critical mass. We still think easing up on some stock funds is the right move now.
The Aggressive Growth Portfolio fell -1.07% in June
Short-term bonds were about the best place to be in June. Vanguard Short-Term Investment Grade (VFSTX) was up 0.21% last month, among our highest performers after ultra-short bond funds and funds that use options to generate income. This is a good time to pare down on shorter term bond funds and bring in some longer term bond funds.
Healthcare’s nice run of beating the market ended with a 3.52% drop in our Health Care SPDR (XLV) ETF.
As is often the case, if healthcare stocks are weak, biotech stocks become especially weak. SPDR Biotech (XBI) dropped 5.2% — our worst performing fund in June.
Janus Global Research (JARFX) had its worst month since last November when we added it to some of our portfolios. However, the 1.46% drop is a smaller percentage drop than the S&P 500 saw in June and continues this funds market-beating streak. A good chunk of this outperformance is simply because international stocks did well recently in comparison to the S&P 500.
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Stocks took a bit of a breather in June. The S&P 500 slipped 1.66%, and the Dow dropped 1.49%. Considering the strength of stocks earlier in the year, this is not much of a pullback. Small cap stocks, which have been underperforming slightly in recent months, were down just 0.57% in June. Surprisingly, tech stocks bucked the trend (the typical tech sector fund was up about 1%) and were, for the most part, up slightly in June, despite the fact that the NASDAQ as a whole fell 0.05%.
Bonds dipped as interest rates rose sharply to over 5.25% on the ten-year government bond, but then recovered late in June as interest rates fell. The real trouble in bonds was on the junk side of the market. High yield bonds fell 2-3% for the month as investors seem to have finally started thinking that they have been underestimating risk in credit and overpaying for many types of higher yield securities. What was good for high-yield bonds was bad for Real Estate Investment Trusts (REITs) and Utility stocks, which were down about 10% and 5% in June respectively.
Fund investors aren’t as optimistic as they could be, and the economy appears to be slowing but sound even though housing shows no signs of recovering. Investor optimism plus the massive amount of capital available to buy stock and bonds should keep stock declines from reaching critical mass. We still think easing up on some stock funds is the right move now.
The Conservative Portfolio dipped -0.61% in June
Just about any investment bought primarily for yield was killed in June. Part of the reason for this was a rise in interest rates, but the real trouble was a sinking sensation that these higher-risk yield-oriented investments have risen too far. Vanguard High Yield Corporate (VWEHX) fell an eyebrow-raising 2.27%, but the real trouble was in yield-oriented equities like utilities.
Short-term bonds were about the best place to be in June. Vanguard Short-Term Investment Grade (VFSTX) was up 0.21% last month, among our highest performers after ultra-short bond funds and funds that use options to generate income. This is a good time to pare down on shorter term bond funds and bring in some longer term bond funds.
Healthcare’s nice run of beating the market ended with a 3.52% drop in our Health Care SPDR (XLV) ETF.
Janus Global Research (JARFX) had its worst month since last November when we added it to some of our portfolios. However, the 1.46% drop is a smaller percentage drop than the S&P 500 saw in June and continues this funds market-beating streak. A good chunk of this outperformance is simply because international stocks did well recently in comparison to the S&P 500.
Stocks took a bit of a breather in June. The S&P 500 slipped 1.66%, and the Dow dropped 1.49%. Considering the strength of stocks earlier in the year, this is not much of a pullback. Small cap stocks, which have been underperforming slightly in recent months, were down just 0.57% in June. Surprisingly, tech stocks bucked the trend (the typical tech sector fund was up about 1%) and were, for the most part, up slightly in June, despite the fact that the NASDAQ as a whole fell 0.05%.
Bonds dipped as interest rates rose sharply to over 5.25% on the ten-year government bond, but then recovered late in June as interest rates fell. The real trouble in bonds was on the junk side of the market. High yield bonds fell 2-3% for the month as investors seem to have finally started thinking that they have been underestimating risk in credit and overpaying for many types of higher yield securities. What was good for high-yield bonds was bad for Real Estate Investment Trusts (REITs) and Utility stocks, which were down about 10% and 5% in June respectively.
Fund investors aren’t as optimistic as they could be, and the economy appears to be slowing but sound even though housing shows no signs of recovering. Investor optimism plus the massive amount of capital available to buy stock and bonds should keep stock declines from reaching critical mass. We still think easing up on some stock funds is the right move now.
The Aggressive Growth Portfolio fell -1.07% in June
Short-term bonds were about the best place to be in June. Vanguard Short-Term Investment Grade (VFSTX) was up 0.21% last month, among our highest performers after ultra-short bond funds and funds that use options to generate income. This is a good time to pare down on shorter term bond funds and bring in some longer term bond funds.
Healthcare’s nice run of beating the market ended with a 3.52% drop in our Health Care SPDR (XLV) ETF.
As is often the case, if healthcare stocks are weak, biotech stocks become especially weak. SPDR Biotech (XBI) dropped 5.2% — our worst performing fund in June.
Janus Global Research (JARFX) had its worst month since last November when we added it to some of our portfolios. However, the 1.46% drop is a smaller percentage drop than the S&P 500 saw in June and continues this funds market-beating streak. A good chunk of this outperformance is simply because international stocks did well recently in comparison to the S&P 500.