Never miss a trade! Sign up for MAXfunds Powerfund Portfolio’s FREE email alerts! CLICK HERE!

February 2016 Performance Review

March 2, 2016

The market slide turned around in mid-February but still left the S&P 500 down a fraction for the month. In the grand scheme of market slides, this is more of a snowslip than an avalanche — at least here in the U.S. Our stock market has largely avoided major drops since 2009, so this drop might seem a little more dramatic than it is. Foreign markets got the real bear, with most down well over 20% from levels hit last year. The scary part is if the U.S. economy gets caught up in the negative inflation pattern in other major economies, we could be looking at a 20%+ drop as well. 

In February, our Conservative portfolio gained 1.10%. Our Aggressive portfolio rose 0.09%. Benchmark Vanguard funds for February 2016: Vanguard 500 Index Fund (VFINX) down 0.15%; Vanguard Total Bond Market Index Fund (VBMFX) up 0.66%; Vanguard Developed Markets Index Fund (VTMGX) down 2.96%; Vanguard Emerging Markets Stock Index (VEIEX) down 0.87%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, fell 0.58%.

Almost everything was down a bit in February. Value beat growth. Latin America recovered from being among the deepest drops from the top. Longer-term government bonds did the best in the bond market as rates fell. The strongest area last month was precious metals and mining shares, based largely on hopes that global renewed efforts to fight economic weakness will cause inflation.

The recent correction that started in early November — if it is already in the rear view mirror — saw the S&P 500 index fall about 13%. And this was the good index. Smaller cap stocks, riskier stocks, and foreign stocks were hit even harder. During this period, our Aggressive portfolio was actually up fractionally (0.3%), while ourConservative portfolio fell 1.3%. The Aggressive portfolio's success versus the index is largely due to shorting commodities; the Conservative portfolio is more bond-heavy and doesn't short to reduce downside, which only helped in the recent drop in rates. 

That said, our current higher allocation to bonds and short funds will mean lagging a strong stock market, particularly if bonds are weak and rates go up, as in theory they should if we avoid recession. But we'd have to miss a lot of upside to lose the benefit of missing a 13% slide.

Stock Funds1mo %
PowerShares DB Crude Oil Dble Short (DTO)9.26%
Proshares Ultrashort NASDAQ Biotech (BIS)7.16%
Vanguard Telecom Services ETF (VOX)3.97%
iShares Mortgage REIT (REM)2.54%
Vanguard Utilities (VPU)1.78%
Homestead Value (HOVLX)0.71%
Vanguard Value (VTV)0.10%
[Benchmark] Vanguard 500 Index (VFINX)-0.15%
ETRACS 1xMonthly Short Alerian MLP (MLPS)-0.62%
Proshares Ultrashort Russel2000 (TWM)-0.78%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-0.87%
iShares MSCI BRIC Index (BKF)-1.80%
Artisan Global Equity (ARTHX)-2.93%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-2.96%
Vanguard Europe Pacific ETF (VEA)-3.08%
Vanguard European ETF (VGK)-3.23%
iShares MSCI Italy Capped (EWI)-6.55%
Gold Short (DZZ)-21.82%
Bond Funds1mo %
Vanguard Extended Duration Treasury (EDV)4.07%
SPDR Barclays Intl. Treasury (BWX)3.30%
Vanguard Long-Term Bond Index ETF (BLV)2.11%
[Benchmark] Vanguard Total Bond Index (VBMFX)0.66%
Vanguard Mortgage-Backed Securities (VMBS)0.29%
Artisan High Income Fund (ARTFX)-0.95%