The conservative portfolio was up just 0.44% in May as bonds fell on rising rates. Stocks were very strong in May with the S&P 500 up almost 3.5%. Vanguard U.S. Value (VUVLX) and Janus Research (JARFX) were up 3.58% and 4.21% respectively, but the hits to bonds funds like Harbor (HABDX) down 1.38% largely wiped out the stock gains.
We are making trades in the Conservative portfolio, effective June 30th, 2007.
Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Conservative Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Conservative Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.
<b>Sales:</b>
•<b>Sell entire</b> high yield bond allocation: Vanguard High Yield Corporate (VWEHX) from 5% to 0%
•<b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 30% to 0%
•<b>Sell entire</b> international diversified allocation: SSgA International Growth Opportunity (SINGX) from 5% to 0%
•<b>Reduce</b> large cap value allocation: Vanguard U.S. Value (VUVLX) from 10% to 5%
<b>Buys:</b>
•<b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%
•<b>Buy new</b> intermediate term bond allocation: Dreyfus Bond Market Index Basic (DBIRX) to 35%
•<b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 5%
<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and to move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.
As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.
We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is wroth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.
<b>Redemption fee information: </b>
If you sell SSgA International Growth Opportunity (SINGX) within 60 days of purchase, you will get hit with a 2% redemption fee.
If you sell Vanguard High Yield Corporate (VWEHX) within one year of purchase you will get hit with a 1% redemption fee. While we’ve owned this allocation since 2002, if you are a new investor, wait until you can sell the fund for no redemption fee.
There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.
The aggressive growth portfolio was up 2.37% in May even though bonds were hit pretty hard. The shorter term bond holdings were only down slightly, but Harbor Bond (HABDX) down 1.38%.
Stocks were very strong in May with the S&P 500 up almost 3.5%. The stock funds in the portfolio largely matched the market’s return in May, with HealthCare Select SPDR the notable underperformer up just 1.55% (after a big run in recent months). Another stinker was T. Rowe Price Japan up just 0.28%. Currently only larger cap Japan stocks are performing well. The real standout was an 8.77% return in the Vanguard Telecom ETF (VOX) – this fund is now up over 43% since added to the portfolio last year. We’re using the outpeformance of these funds as an opportunity to sell. Tech stocks were strong as the Technology SPDR (XLK) saw a 5.06% move.
We are making trades in the Aggressive Growth portfolio, effective June 30th, 2007.
Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Aggressive Growth Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Aggressive Growth Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.
<b>Sales:</b>
•<b>Sell entire</b> Japan allocation: T.Rowe Price Japan (PRJPX) from 5% to 0%
•<b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 20% to 0%
•<b>Reduce</b> large cap blend allocation: Bridgeway Blue-Chip 35 (BRLIX) from 35% to 20%
•<b>Sell entire</b> sector: telecom allocation: Vanguard Telecom Services ETF (VOX) from 5% to 0%
<b>Buys:</b>
•<b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%
•<b>Buy new</b> intermediate term bond allocation: Vanguard Intermediate Term Bond Index (VBIIX) to 20%
•Increase diversified bond allocation: Harbor Bond (HABDX) from 5% to 15%
•<b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 10%
<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.
As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.
We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is worth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.
High yield bonds, international stocks, telecom stocks (and higher yield, value stocks in general) have all outperformered and attracted new money and we want to reduce our stake and focus on investment grade bonds and U.S. growth stocks.
<b>Redemption fee information: </b>
If you sell T.Rowe Price Japan (PRJPX) within 90 days of purchase, you will get hit with a 2% redemption fee.
There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.
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The conservative portfolio was up just 0.44% in May as bonds fell on rising rates. Stocks were very strong in May with the S&P 500 up almost 3.5%. Vanguard U.S. Value (VUVLX) and Janus Research (JARFX) were up 3.58% and 4.21% respectively, but the hits to bonds funds like Harbor (HABDX) down 1.38% largely wiped out the stock gains.
We are making trades in the Conservative portfolio, effective June 30th, 2007.
Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Conservative Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Conservative Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/conservativetrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.
<b>Sales:</b>
• <b>Sell entire</b> high yield bond allocation: Vanguard High Yield Corporate (VWEHX) from 5% to 0%
• <b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 30% to 0%
• <b>Sell entire</b> international diversified allocation: SSgA International Growth Opportunity (SINGX) from 5% to 0%
• <b>Reduce</b> large cap value allocation: Vanguard U.S. Value (VUVLX) from 10% to 5%
<b>Buys:</b>
• <b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%
• <b>Buy new</b> intermediate term bond allocation: Dreyfus Bond Market Index Basic (DBIRX) to 35%
• <b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 5%
<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and to move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.
As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.
We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is wroth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.
<b>Redemption fee information: </b>
If you sell SSgA International Growth Opportunity (SINGX) within 60 days of purchase, you will get hit with a 2% redemption fee.
If you sell Vanguard High Yield Corporate (VWEHX) within one year of purchase you will get hit with a 1% redemption fee. While we’ve owned this allocation since 2002, if you are a new investor, wait until you can sell the fund for no redemption fee.
There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.
The aggressive growth portfolio was up 2.37% in May even though bonds were hit pretty hard. The shorter term bond holdings were only down slightly, but Harbor Bond (HABDX) down 1.38%.
Stocks were very strong in May with the S&P 500 up almost 3.5%. The stock funds in the portfolio largely matched the market’s return in May, with HealthCare Select SPDR the notable underperformer up just 1.55% (after a big run in recent months). Another stinker was T. Rowe Price Japan up just 0.28%. Currently only larger cap Japan stocks are performing well. The real standout was an 8.77% return in the Vanguard Telecom ETF (VOX) – this fund is now up over 43% since added to the portfolio last year. We’re using the outpeformance of these funds as an opportunity to sell. Tech stocks were strong as the Technology SPDR (XLK) saw a 5.06% move.
We are making trades in the Aggressive Growth portfolio, effective June 30th, 2007.
Because of the relative complexity of these trades we have created an easy-to-use <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">trade worksheet</a>. Subscribers who invest in the Aggressive Growth Portfolio can download, print out, and fill in the worksheet to help them determine how much of their holdings need to be bought and sold to match our post-trade portfolios and to rebalance. You can download the Aggressive Growth Portfolio Worksheet by <a href="http://maxadvisor.com/mint/pepper/orderedlist/downloads/download.php?file=http%3A//maxadvisor.com/newsletter/worksheets/aggressivegrowthtrades0607.pdf">clicking here</a>. Please note that the document is an Adobe PDF. If you need to download Adobe Acrobat reader, you can find it by <a href="http://www.adobe.com/products/acrobat/readstep2.html">clicking here</a>.
<b>Sales:</b>
• <b>Sell entire</b> Japan allocation: T.Rowe Price Japan (PRJPX) from 5% to 0%
• <b>Sell entire</b> short term bond allocation: Vanguard Short Term Investment Grade (VFSTX) from 20% to 0%
• <b>Reduce</b> large cap blend allocation: Bridgeway Blue-Chip 35 (BRLIX) from 35% to 20%
• <b>Sell entire</b> sector: telecom allocation: Vanguard Telecom Services ETF (VOX) from 5% to 0%
<b>Buys:</b>
• <b>Buy new</b> short allocation: American Century Long-Short Equity (ALHIX) to 5%
• <b>Buy new</b> intermediate term bond allocation: Vanguard Intermediate Term Bond Index (VBIIX) to 20%
• Increase diversified bond allocation: Harbor Bond (HABDX) from 5% to 15%
• <b>Buy new</b> large cap growth allocation: Vanguard Growth ETF (VUG) to 10%
<b>Why: </b> As noted in our trade alert email, stock prices are up across the board and interest rates – while still on the low side historically – are high enough to reduce our short term bond fund holdings and move more into intermediate term bonds. When stocks get too in favor, it can be particularly dangerous to those investing for low risk.
As we noted last year, “Our shift to short term bonds reflects our feeling that owning longer term bonds when the ten year government bond yields around 4.5% isn’t much of an idea.” Now we can get over 5% on a ten year bond (5.3% this past week) and stock prices are higher, making them not as attractive as last year. Cheaper bonds and more expensive stocks calls for a re-allocation.
We’re going out on a bit of a limb with the newish and undiscovered American Century Long Short Equity (ALHIX). Funds that shoot for so-called market neutral returns or just do heavy shorting (selling borrowed stock in the hope of buying it back at a cheaper price later) tend to underperform: their returns almost never justify their higher fees. This fund may prove a rare exception that is worth taking a small stake in before it closes to new investors. It is among the lowest fee funds that takes heavy short positions, and so far has delivered acceptable low risk returns. Frankly, the appeal is higher when short term rates are lower, but we’re going to give this fund the benefit of the doubt for now. With the global stock market racing higher, we’re willing to take a risk on a counter-intuitive idea that has the potential to deliver big returns over the next 1-3 years.
High yield bonds, international stocks, telecom stocks (and higher yield, value stocks in general) have all outperformered and attracted new money and we want to reduce our stake and focus on investment grade bonds and U.S. growth stocks.
<b>Redemption fee information: </b>
If you sell T.Rowe Price Japan (PRJPX) within 90 days of purchase, you will get hit with a 2% redemption fee.
There are no other short-term redemption fees associated with these sales. Please check with your broker if you do not buy directly from the funds to see if you are beyond the time period of any broker-imposed short term penalty fees before selling. Do not pay a short term redemption fee just to leave a short term bond fund in favor of a longer term bond fund a few weeks before the fee would go away. Please note our alternative choices for those that have trouble buying the primary choice cheaply.