The Conservative portfolio was essentially flat in September, up just 0.08%. Bonds and stocks flipped once again – bonds fell while stocks went up.
The only really weak spot in the portfolio last month was our 5% stake in American Century International Bond. The fund fell 2.5% (reversing August’s gains) as the U.S. dollar rose – surprising given the recent hurricane and near-guaranteed deficit spending. Perhaps that new debt will have to be purchased by foreigners, which means more dollar buying (boosting the dollar) in the near turn.
The Harbor bond fund fell just under 1% – about as far as the aggregate bond index fell. Bill Gross is calling for a period of stagnant economic growth, which he thinks will (and usually does) lead to lower rates (good for bonds). He may have upped his duration (more longer-term bonds) and increased his credit quality in recent months to adjust. This means if rates climb this fund will lose more than it would have before. His view differs from a growing concern of stagnation with inflation and higher interest rates – the higher rates will cause economic slowdown. He takes the opposite view; an economic slowdown will cause lower rates. We’ll have to wait and see who is right in this chicken-before-the-egg issue. Both scenarios suck eggs of course.
Two hot spots in the portfolio failed to beat out the bond drag by enough to lift the entire portfolio. SSgA International Growth, like most foreign funds, was up (about 4% for the month). We may have seen the last big umpf in utility funds last month; American Century Utility Income was up 3.65% – 94.8% since we added it to the portfolio some two and a half years ago.
The Aggressive Growth portfolio was up just under 1% in September. Bonds and stocks flipped once again – bonds fell while stocks went up.
The portfolio had the punch of foreign stocks. Artisan International Small Cap rose 4.25% while T. Rowe Price Japan climbed a big 9.19% and is now up about 20% over the last three months.
The latest jump in Japanese stock prices seems mostly related to a growing feeling that one of the greatest bear markets in global stock market history is officially over. We prefer big stakes in Japan when fear is more prevalent, but we’re sticking with our reduced stake, even after the jump. Japan benefits from a rising U.S. dollar and the recent recovery in our dollar means Japanese exports will still have an easy market here. Now if only consumers can keep up the spending . . .
In first place for this portfolio was SSgA Emerging Markets, up 9.27% and now up a remarkable (and somewhat scary) 152% since added to the portfolio. Before you get too excited just remember what happened the last time emerging market funds were all the rage in the early 90s – a sharp drop followed by almost 10 years of tepid performance. We’re getting close to cutting this fund loose completely.
Healthcare stocks were weak; HealthCare Select SPDR was down 0.58%. We see this fund doing better than most going forward, particularly if the market and economy turns south. Technology wasn’t much better; the Technology SPDR was basically flat last month.
The Harbor bond fund fell just under 1% – about as far as the aggregate bond index fell. Bill Gross is calling for a period of stagnant economic growth, which he thinks will (and usually does) lead to lower rates (good for bonds). He may have upped his duration (more longer-term bonds) and increased his credit quality in recent months to adjust. This means if rates climb this fund will lose more than it would have before. His view differs from a growing concern of stagnation with inflation and higher interest rates – the higher rates will cause economic slowdown. He takes the opposite view; an economic slowdown will cause lower rates. We’ll have to wait and see who is right in this chicken-before-the-egg issue. Both scenarios suck eggs of course.
New User? CLICK HERE!
The Conservative portfolio was essentially flat in September, up just 0.08%. Bonds and stocks flipped once again – bonds fell while stocks went up.
The only really weak spot in the portfolio last month was our 5% stake in American Century International Bond. The fund fell 2.5% (reversing August’s gains) as the U.S. dollar rose – surprising given the recent hurricane and near-guaranteed deficit spending. Perhaps that new debt will have to be purchased by foreigners, which means more dollar buying (boosting the dollar) in the near turn.
The Harbor bond fund fell just under 1% – about as far as the aggregate bond index fell. Bill Gross is calling for a period of stagnant economic growth, which he thinks will (and usually does) lead to lower rates (good for bonds). He may have upped his duration (more longer-term bonds) and increased his credit quality in recent months to adjust. This means if rates climb this fund will lose more than it would have before. His view differs from a growing concern of stagnation with inflation and higher interest rates – the higher rates will cause economic slowdown. He takes the opposite view; an economic slowdown will cause lower rates. We’ll have to wait and see who is right in this chicken-before-the-egg issue. Both scenarios suck eggs of course.
Two hot spots in the portfolio failed to beat out the bond drag by enough to lift the entire portfolio. SSgA International Growth, like most foreign funds, was up (about 4% for the month). We may have seen the last big umpf in utility funds last month; American Century Utility Income was up 3.65% – 94.8% since we added it to the portfolio some two and a half years ago.
The Aggressive Growth portfolio was up just under 1% in September. Bonds and stocks flipped once again – bonds fell while stocks went up.
The portfolio had the punch of foreign stocks. Artisan International Small Cap rose 4.25% while T. Rowe Price Japan climbed a big 9.19% and is now up about 20% over the last three months.
The latest jump in Japanese stock prices seems mostly related to a growing feeling that one of the greatest bear markets in global stock market history is officially over. We prefer big stakes in Japan when fear is more prevalent, but we’re sticking with our reduced stake, even after the jump. Japan benefits from a rising U.S. dollar and the recent recovery in our dollar means Japanese exports will still have an easy market here. Now if only consumers can keep up the spending . . .
In first place for this portfolio was SSgA Emerging Markets, up 9.27% and now up a remarkable (and somewhat scary) 152% since added to the portfolio. Before you get too excited just remember what happened the last time emerging market funds were all the rage in the early 90s – a sharp drop followed by almost 10 years of tepid performance. We’re getting close to cutting this fund loose completely.
Healthcare stocks were weak; HealthCare Select SPDR was down 0.58%. We see this fund doing better than most going forward, particularly if the market and economy turns south. Technology wasn’t much better; the Technology SPDR was basically flat last month.
The Harbor bond fund fell just under 1% – about as far as the aggregate bond index fell. Bill Gross is calling for a period of stagnant economic growth, which he thinks will (and usually does) lead to lower rates (good for bonds). He may have upped his duration (more longer-term bonds) and increased his credit quality in recent months to adjust. This means if rates climb this fund will lose more than it would have before. His view differs from a growing concern of stagnation with inflation and higher interest rates – the higher rates will cause economic slowdown. He takes the opposite view; an economic slowdown will cause lower rates. We’ll have to wait and see who is right in this chicken-before-the-egg issue. Both scenarios suck eggs of course.