Another negative month. With August’s 5.45% drop, the stock market is now down four months in a row and about 10% in total since the end of April, enough to push the market into slightly negative territory for the year (talk about the old Wall Street adage ‘sell in May and go away’). But considering we were down about 20% top to bottom from July 22nd to the lows in August, being down ‘only’ 10% feels sort of fortunate.
All this mayhem was the result of a strange brew of debt ceiling shenanigans, souring economic data, and European financial problems. And yet stocks are still up 18.33% (with dividends) over the last 12 months, despite sluggish economic growth (that has somehow produced very strong earnings for corporate America). Bonds have done well, particularly longer-term US government bonds, with about a 10% return for the month. Higher risk bonds that are more sensitive to economic trouble slid, with junk bond funds off about 4.5% for the month. Emerging market bonds did relatively well for a riskier asset with only a 0.5% slide. Investors aren’t worried about emerging market debt, only emerged economies like Italy.
In August, our Conservative Portfolio was down -1.74% while our Aggressive Portfolio was down -3.58%. The benchmark Vanguard 500 (VFINX) fund delivered a -5.45% return for the month while Vanguard Total Bond Index (VBMFX) was up 1.46%. Foreign stocks dropped 8.96% in August. We can’t complain; we are up slightly in both portfolios for 2011 (1.94% for Conservative, 0.77% for Aggressive) while the market is down, but we should have cut back on Europe and smaller cap stocks a few months ago after the big run over the last year.
The best performing stock fund categories last month were precious metals funds, up 6.70%, funds that short, up 3.10%, and utilities, down just 1.40%. The worst performing were European stock funds, down 10.60%, energy sector funds, down 9.50%, financial sector funds, which fell 9.30%, and small cap growth funds, down 9.20%.
First, August's Benchmark Beaters:
Our alternative fund PowerShares DB US Dollar Index (UUP) increased 0.19% in August, better than the S&P 500 by 5.6%, but hardly the flight to the safety of the dollar we would have expected during a crisis.
American Century Utility Income (BULIX) slipped 0.19% last month, besting the S&P 500 by 5.3% as safer stocks beat riskier stocks. Healthcare fund Health Care Select SPDR (XLV) fell just 2.11% for similar reasons.
Our Long/Short category fund PowerShares DB Commodity Double (DEE) fell 2.13% in August, outpacing the S&P 500 by 3.3%. We would expect much more out of this fund in a down month but its returns were hurt by the continued outperformance of precious metals.
Vanguard Telecom Services ETF (VOX) – dropped 3.05%, ahead of the S&P 500 by 2.4%.
Large cap growth fund PRIMECAP Odyssey Stock (POSKX) fell -3.96% in for the month, not bad for a growth stock fund and quite a bit better than the higher risk PRIMECAP Odyssey Growth (POGRX) which we also own, and better than the S&P 500 by 1.5%.
Government Bond fund American Century Government Bond (CPTNX) climbed 2.00% in August, better than the bond market by 0.5% as investors fled to quality, even if that quality was at the center of the crisis they were fleeing from. Government bonds were about the best performing investments for the troubled month.
Vanguard European ETF (VGK) dropped 9.28%, behind the S&P 500 by -3.8% and not far off from ourInternational Diversified fund UMB Scout Worldwide (UMBWX) which sank -8.80% in August. Foreign stocks have been falling harder than US stocks.
Royce Financial Services Fund (RYFSX) fell 7.84% in August, worse than the S&P 500 by -2.4% as an underperforming category underperformed some more. Banks are back at the center of the fear list as investors assume they will be in the same boat as a few years ago, only without a possible government bailout to save them if the boat hits an iceberg.
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Another negative month. With August’s 5.45% drop, the stock market is now down four months in a row and about 10% in total since the end of April, enough to push the market into slightly negative territory for the year (talk about the old Wall Street adage ‘sell in May and go away’). But considering we were down about 20% top to bottom from July 22nd to the lows in August, being down ‘only’ 10% feels sort of fortunate.
All this mayhem was the result of a strange brew of debt ceiling shenanigans, souring economic data, and European financial problems. And yet stocks are still up 18.33% (with dividends) over the last 12 months, despite sluggish economic growth (that has somehow produced very strong earnings for corporate America). Bonds have done well, particularly longer-term US government bonds, with about a 10% return for the month. Higher risk bonds that are more sensitive to economic trouble slid, with junk bond funds off about 4.5% for the month. Emerging market bonds did relatively well for a riskier asset with only a 0.5% slide. Investors aren’t worried about emerging market debt, only emerged economies like Italy.
In August, our Conservative Portfolio was down -1.74% while our Aggressive Portfolio was down -3.58%. The benchmark Vanguard 500 (VFINX) fund delivered a -5.45% return for the month while Vanguard Total Bond Index (VBMFX) was up 1.46%. Foreign stocks dropped 8.96% in August. We can’t complain; we are up slightly in both portfolios for 2011 (1.94% for Conservative, 0.77% for Aggressive) while the market is down, but we should have cut back on Europe and smaller cap stocks a few months ago after the big run over the last year.
The best performing stock fund categories last month were precious metals funds, up 6.70%, funds that short, up 3.10%, and utilities, down just 1.40%. The worst performing were European stock funds, down 10.60%, energy sector funds, down 9.50%, financial sector funds, which fell 9.30%, and small cap growth funds, down 9.20%.
First, August's Benchmark Beaters:
Our alternative fund PowerShares DB US Dollar Index (UUP) increased 0.19% in August, better than the S&P 500 by 5.6%, but hardly the flight to the safety of the dollar we would have expected during a crisis.
American Century Utility Income (BULIX) slipped 0.19% last month, besting the S&P 500 by 5.3% as safer stocks beat riskier stocks. Healthcare fund Health Care Select SPDR (XLV) fell just 2.11% for similar reasons.
Our Long/Short category fund PowerShares DB Commodity Double (DEE) fell 2.13% in August, outpacing the S&P 500 by 3.3%. We would expect much more out of this fund in a down month but its returns were hurt by the continued outperformance of precious metals.
Vanguard Telecom Services ETF (VOX) – dropped 3.05%, ahead of the S&P 500 by 2.4%.
Large cap growth fund PRIMECAP Odyssey Stock (POSKX) fell -3.96% in for the month, not bad for a growth stock fund and quite a bit better than the higher risk PRIMECAP Odyssey Growth (POGRX) which we also own, and better than the S&P 500 by 1.5%.
Government Bond fund American Century Government Bond (CPTNX) climbed 2.00% in August, better than the bond market by 0.5% as investors fled to quality, even if that quality was at the center of the crisis they were fleeing from. Government bonds were about the best performing investments for the troubled month.
Benchmark Laggards Included:
Satuit Capital Micro Cap (SATMX) sank 11.40% in August, worse than the S&P 500 by -6.0% as investors fled smaller cap stocks.
Vanguard European ETF (VGK) dropped 9.28%, behind the S&P 500 by -3.8% and not far off from our International Diversified fund UMB Scout Worldwide (UMBWX) which sank -8.80% in August. Foreign stocks have been falling harder than US stocks.
Royce Financial Services Fund (RYFSX) fell 7.84% in August, worse than the S&P 500 by -2.4% as an underperforming category underperformed some more. Banks are back at the center of the fear list as investors assume they will be in the same boat as a few years ago, only without a possible government bailout to save them if the boat hits an iceberg.
Our other PRIMECAP fund, PRIMECAP Odyssey Growth (POGRX) sank -7.44% last month, worse than the S&P 500 by -2.0%.