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The Next Shoe to Drop - Part II

Welcome back, dear readers. As temperatures (and the stock market) continue to rise, it’s time for Part II of our two-part summer beach read about potential causes of the next market drop.

June 2014 Performance Review

The market seems to be moving up on a combination of low interest rates, an economy that isn't quite as weak as feared, and a hot market for smaller growth stocks. 

Waiting for the next shoe to drop – Will It Be a Pump or a Flat?

It's not clear where the next significant slide will come from. We don’t have a broad tech and growth stock bubble like we had in 2000. We don’t have a real estate bubble propping up the economy. Not that you need a reason for the stock market to slide. There's still no consensus as to what caused the crash of 1987, and experts differ on the reasons for the 1929 crash as well as the depth of the economic problems following the slide.

May 2014 Performance Review

In May, lingering global stock and bond market fears evaporated like air conditioner condensation on hot asphalt. We even had a (hopefully) weather-induced  negative first quarter GDP figure. Previously lagging emerging markets rebounded while the S&P 500 gained over 2%. More surprising (to some) was a retreat in interest rates, pushing bond prices higher and likely playing a role in stock prices rising.

The Permanently High Plateau

While it's true that stocks are the best-performing investment in the long run, they're also one of the most volatile, which can trigger poor returns far worse than the other lesser  asset classes, despite the fact that they often have stability going for them.

April 2014 Performance Review

April was similar to March in that conservative investments outperformed growth. This again played well into our Conservative portfolio, which posted a 1.28% return in April. That beat the stock and bond markets and continued this year's nice streak.

Is Wall Street Crooked?

 Flash Boys isn't about a devastating Madoff-esque Ponzi scheme. It's more about how Wall Street as an industry can maim a portfolio with a thousand cuts, the razor of focus this time being sophisticated front running computer schemes.

March 2014 Performance Review

There was particular strength in Utilities and Telecom (and value stocks in general) in March. We own these sectors in both of our portfolios. Interestingly healthcare - usually attractive to value oriented investors and those seeking safety (not including biotech) - was weak. We recently got out of healthcare because it has just had too many years of outperformance and the biotech area in particular was becoming volatile and too hot after very strong performance.

Happy Anniversary, Bull Market

After a largely uninterrupted five-year run-up in stocks that began in early 2009, optimism is high, but so are doubts over the sustainability of good times for stocks.

February 2014 Performance Review

The seesaw is back. A market that was looking a little scary in January and early February rebounded strongly, leaving the stocks basically flat for the year (until, that is, the start of March when Russian mischief sent stocks plummeting anew).