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October 2015 Performance Review

November 3, 2016

October was a strange one — and not just for the elections. Pretty much everything that was recovering this year slipped in last month. It's not uncommon for risky assets to all move as one and lower risk assets to do well in such times, the so-called 'risk off' trade. What was a little unusual is almost all fund categories were down in October except riskier debt and a few emerging markets.

For example, biotech stocks slid hard, driving our leveraged short Proshares Ultrashort NASDAQ Biotech (BIS) up just shy of 25% and making up some lost ground for us. Gold also slipped. Investment-grade long-term bonds were hit hard as rates rose, driving Vanguard Extended Duration Treasury (EDV) down 6.18% for the month — our worst individual fund showing in October.

Oil was weak near the end of the month driving PowerShares DB Crude Oil Dble Short (DTO) up 4.6%. Riskier income funds like iShares Mortgage REIT (REM) and Artisan High Income Fund (ARTFX) posted gains.

Foreign markets were down yet Brazil was almost the lone big winner up over 7%. China and Russia were weak or our stake in iShares MSCI BRIC Index (BKF) would have beat the S&P 500 by a wider margin with the Brazil sub-allocation. While in general riskier assets fell, some of the hardest hit risky assets from recent years continued to rise.

In all this we did well relatively with the Aggressive Powerfund Portfolio, which benefited from shorts and emerging markets. But the drag of longer-term investment-grade bonds and yield-sensitive stocks was too much for the Conservative portfolio, which had a poor month (though it's still up 6.62% for the year).

Our Conservative portfolio declined 2.16%. Our Aggressive portfolio fell 0.75%. Benchmark Vanguard funds for October 2016: Vanguard 500 Index Fund (VFINX) down 1.83%; Vanguard Total Bond Market Index Fund (VBMFX) down 0.81%; Vanguard Developed Markets Index Fund (VTMGX) down 2.33%; Vanguard Emerging Markets Stock Index (VEIEX) up 0.63%; Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 1.82%.

Stock Funds1mo %
Proshares Ultrashort NASDAQ Biotech (BIS)24.89%
Proshares Ultrashort Russel2000 (TWM)9.30%
Gold Short (DZZ)6.03%
PowerShares DB Crude Oil Dble Short (DTO)4.60%
ETRACS 1xMonthly Short Alerian MLP (MLPS)4.26%
iShares Mortgage REIT (REM)2.82%
iShares MSCI Italy Capped (EWI)2.36%
Vanguard Utilities (VPU)0.90%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)0.63%
iShares MSCI BRIC Index (BKF)-0.37%
Vanguard Value (VTV)-1.09%
[Benchmark] Vanguard 500 Index (VFINX)-1.83%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-2.33%
Vanguard Europe Pacific ETF (VEA)-2.41%
Homestead Value (HOVLX)-3.00%
Artisan Global Equity (ARTHX)-3.39%
Vanguard European ETF (VGK)-3.53%
Vanguard Telecom Services ETF (VOX)-3.61%
Bond Funds1mo %
Artisan High Income Fund (ARTFX)0.71%
Vanguard Mortgage-Backed Securities (VMBS)-0.36%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.81%
Vanguard Long-Term Bond Index ETF (BLV)-3.06%
SPDR Barclays Intl. Treasury (BWX)-4.20%
Vanguard Extended Duration Treasury (EDV)-6.18%