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December 3, 2013

2013 is turning out to be among the best calendar years for stocks ever. With November’s 3% rise in the S&P 500, we’re now up almost 29% for the year. But the excitement was mostly in U.S. stocks. Bonds sunk slightly and emerging market stocks dropped just over 2%. Larger foreign stocks also underperformed, up less than 1%. 

The S&P 500 beat most funds in November and was a tough benchmark to beat. Only our commodity short funds and our microcap stock fund beat the index, though three of our stock funds were close. Alternative investments in general did poorly, continuing a multi-year trend, which is why our gold and oil short ETFs were up sharply. 

Our Conservative portfolio fell 0.18% last month. Our Aggressive portfolio gained 1.01%. Benchmark Vanguard funds for November 2013: 500 Index (VFINX) up 3.03%, Total Bond Market Index (VBMFX) down 0.35%, International Index (VTMGX) up 0.69%, Emerging Markets Stock Index (VEIEX) down 2.02%, Vanguard STAR (VGSTX), a total balanced portfolio, up 1.48%.

In addition to bonds, we were dragged down by telecom and utility stocks, safe areas that were not appealing to investors as the market raced higher. Natural resource and real estate funds were down even more last month, but the hardest hit were precious metals funds, down about 13% for the month and a whopping 50% over the last year.

For once, Doubleline Floating Rate (DLFRX) was our best performing bond fund as interest rates went up along with stocks, which is exactly what you would expect from such a fund in those market conditions.

Right now many fund categories are on the expensive side, notably small cap stocks funds, which have done well for years and now trade at fairly lofty valuations. Unless earnings growth takes off across the economy there should be low returns in these areas for a few years.

The best thing we can say about last month from our performance is when the stock market stops going up 3% a month we should be positioned well and our aggressive portfolio beat the average aggressive allocation fund. 

Stock Funds1mo %
Gold Short (DZZ)11.16%
PowerShares DB Crude Oil Dble Short (DTO)6.84%
Satuit Capital Micro Cap (SATMX)4.85%
[Benchmark] Vanguard 500 Index (VFINX)3.03%
PRIMECAP Odyssey Growth (POGRX)2.90%
Artisan Global Equity (ARTHX)2.71%
Vanguard MegaCap Growth (MGK)2.58%
Vanguard European ETF (VGK)1.02%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)0.69%
Vanguard Europe Pacific ETF (VEA)0.66%
Wasatch Long/Short (FMLSX)0.55%
Wasatch Frontier Emerg Sm Count (WAFMX)0.32%
iShares MSCI BRIC Index (BKF)0.16%
American Century Utility Income (BULIX)-1.43%
Vanguard Telecom Services ETF (VOX)-1.69%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-2.02%
Bond Funds1mo %
DoubleLine Floating Rate N (DLFRX)0.41%
PIMCO Mortgage Opportunities D (PMZDX)0.31%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.35%
Vanguard Long-Term Bond Index ETF (BLV)-1.76%