Five months of negative returns in a row for stocks had to end with a sharp rebound. A 10.91% jump in U.S. stocks in October pushed the market up for 2011, but just by a little over 1%. Larger cap foreign stocks have only gained 5.65% year to date and are still down by high single digits in 2011. Emerging markets rebounded 13.51% and were still down 13% year to date. Supposedly the Greece situation is coming to an acceptable solution…except every few days that seems too change.
One oddity of the new market environment is everything that is somewhat risky to very risky has been moving in near perfect sync - so wild swings tend to hit everything the same way, making well diversified portfolios appear quite risky. Longer term government bonds –which have limited long term appeal at current low rates, remain the best offset to sliding everything, almost always going up significantly when fears drive riskier global assets down.
Our portfolios are a little too heavy in bonds and safer categories that did well on the way down, (specifically utilities and healthcare) to jump as much as the market on such a big rebound, but both are also beating the S&P 500 year to date with less volatility. We could have used another stock allocation increase in our aggressive portfolio as we neared Dow 10,000 but were getting a little greedy for deals as the fear was building in the market.
The best performing stock fund categories last month were Latin America, up 17%, natural resources, up 16.8%, and energy, up 16.50%. The worst performing were Japan, down -1.00%, Utilities, up 6.05% and Healthcare, up 6.37% - basically the categories that did the best on the way down. In bonds, junk bond funds were up 5.52% followed closely by emerging market bond funds, up 5.35%, while long term government bond funds slid 3.51%.
Vanguard European ETF (VGK) rose 12.42% in October, better than the S&P 500 by 1.5% and foreign stocks in general as Europe – hit the hardest in the crisis rose the most on any good news for the area.
Our alternative fund PowerShares DB US Dollar Index (UUP) fell -3.30% in October, worse than the S&P 500 by -14.2% as the US dollar sunk after climbing during the Greece crisis.
iShares MSCI Japan Index (EWJ) slipped -0.63% in October, worse than the S&P 500 by -11.5%.
Our extremely long duration Government Bond fund Vanguard Extended Duration Treasury (EDV) sank -6.68% in October, worse than the bond market by -6.8%
Vanguard Telecom Services ETF (VOX) climbed 4.20% in October, worse than the S&P 500 by -6.7%.
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Five months of negative returns in a row for stocks had to end with a sharp rebound. A 10.91% jump in U.S. stocks in October pushed the market up for 2011, but just by a little over 1%. Larger cap foreign stocks have only gained 5.65% year to date and are still down by high single digits in 2011. Emerging markets rebounded 13.51% and were still down 13% year to date. Supposedly the Greece situation is coming to an acceptable solution…except every few days that seems too change.
One oddity of the new market environment is everything that is somewhat risky to very risky has been moving in near perfect sync - so wild swings tend to hit everything the same way, making well diversified portfolios appear quite risky. Longer term government bonds –which have limited long term appeal at current low rates, remain the best offset to sliding everything, almost always going up significantly when fears drive riskier global assets down.
Our portfolios are a little too heavy in bonds and safer categories that did well on the way down, (specifically utilities and healthcare) to jump as much as the market on such a big rebound, but both are also beating the S&P 500 year to date with less volatility. We could have used another stock allocation increase in our aggressive portfolio as we neared Dow 10,000 but were getting a little greedy for deals as the fear was building in the market.
In October, Our Conservative portfolio was up 2.82% while Our Aggressive portfolio gained 4.62%. The benchmark Vanguard 500 (VFINX) fund delivered a 10.91% return in October while Vanguard Total Bond Index (VBMFX) returned 0.16%. Foreign stocks, as measured by Vanguard Tax-Managed International (VTMGX), gained 5.65% while emerging market stocks as measured by Vanguard Emerging Markets Stock Index (VEIEX) were up 13.51%
The best performing stock fund categories last month were Latin America, up 17%, natural resources, up 16.8%, and energy, up 16.50%. The worst performing were Japan, down -1.00%, Utilities, up 6.05% and Healthcare, up 6.37% - basically the categories that did the best on the way down. In bonds, junk bond funds were up 5.52% followed closely by emerging market bond funds, up 5.35%, while long term government bond funds slid 3.51%.
In portfolio fund action in October:
Our alternative fund Satuit Capital Micro Cap (SATMX) soared 15.91% in October, better than the S&P 500 by 5.0%.
Our Large Cap Value fund Homestead Value Fund (HOVLX) soared 13.07% in October.
Vanguard European ETF (VGK) rose 12.42% in October, better than the S&P 500 by 1.5% and foreign stocks in general as Europe – hit the hardest in the crisis rose the most on any good news for the area.
Large Cap Growth fund PRIMECAP Odyssey Growth (POGRX) jumped 12.13% in October.
Our Investment Grade Bond fund American Century Core Plus (ACCNX) increased 0.93% in October, better than the bond market by 0.8%
Our Investment Grade Bond fund Metropolitan West Total Return (MWTRX) increased 0.65% in October, better than the bond market by 0.5%
In underwhelming performance:
Our alternative fund PowerShares DB US Dollar Index (UUP) fell -3.30% in October, worse than the S&P 500 by -14.2% as the US dollar sunk after climbing during the Greece crisis.
iShares MSCI Japan Index (EWJ) slipped -0.63% in October, worse than the S&P 500 by -11.5%.
Our extremely long duration Government Bond fund Vanguard Extended Duration Treasury (EDV) sank -6.68% in October, worse than the bond market by -6.8%
Vanguard Telecom Services ETF (VOX) climbed 4.20% in October, worse than the S&P 500 by -6.7%.