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The Rocky Path

Many factors could trigger another major slide in the next few years, which is why stocks are intrinsically riskier than most bonds and cash. Yet it's possible to estimate an expected total return over, say, the next 10 years.

February 2013 Performance Review

What we’re really seeing here is the steady erosion in returns of anything other than bonds. Among the worst areas over the last five years – sporting serious negative returns of between 5 and 10% per year on average (as opposed to positive annualized returns of the same magnitude in U.S. stock funds) - are gold mining-oriented and commodities funds. Gold the metal is still higher than 5 years ago, though the yellow metal is finally showing some erosion in price and popularity. 

There's No Perfect Hedge

Someone once said that the only perfect hedge is in a Japanese garden. Here are a few typical strategies for minimizing downside (and upside…) in a portfolio, with some brief notes on the imperfections of each, especially in light of an ever-shifting landscape.

January 2013 Performance Review

All this upside is starting to attract attention. Investors are warming to stock funds again. This tends to happen shortly before market dips, and if bonds continue to slide as stocks rise we would expect to cut back on equities and shift a little more to debt, but currently stocks are still more appealing valuation-wise than bonds are.

2012 Review - Looking Back, Going Forward

Although the European economy appears to be on the mend, with  some of the biggest financial misfit euro-area countries now able to borrow again, U.S. hijinks should continue for much of 2013, since many of the decisions that need to be made about the debt ceiling and spending cuts were largely kicked down the road for later theatre. Are you not entertained?

December 2012 Performance Review

Investing in markets that seem poised to plummet can be more rewarding than investing when things seem safe. Sadly many investors bailed out of stock funds in recent years. Good news on the bad news front: most every serious financial problem facing America was just kicked down the road.

She Moves in Mysterious Ways: Our Year-End Super-Duper Fiscal Cliff Spectacular

The so-called fiscal cliff is just a couple of weeks away, and while the fiscal cliff is certainly real, the ultimate size of the drop-off is unknown. There are many complex financial happenings at the end of 2012. Some have to do with estate taxes, some with ordinary income, and some with investment income. We can’t speak to all of the strategies available to those with different financial issues; moreover, non-investment tax issues would require the advice of estate attorneys and accountants. That doesn't mean, however, that everyone needs to seek such professionals or make any changes.

November 2012 Performance Review

Slowly but surely the Powerfund Portfolios are inching up on the S&P 500’s double-digit 2012 return. Competing against the S&P is a challenge because the portfolios are almost always at a lower risk profile because of our allocation to bonds. Even when we are closer heavily allocated to stocks and light on bonds (usually after big slides in the market) we are more diversified than the S&P 500.

Vote Party Poopers

The party that should win is the Party Pooper Party, the one that gives voters a reality check – not nearly as fun as hocus-pocus economics. The Party Pooper Party never wins elections, though, because voters want to believe in magic. 

October 2012 Performance Review

The good times for stocks came to an end in October, though not too abruptly. The S&P 500 was down 1.86% for the month, but is still up an impressive 14.16% for the year. The recent storm hitting the financial epicenter of America and the world had no negative impact on stocks other than a historic closing of the exchange. Surprisingly, foreign stocks did well while emerging market stocks declined. Bonds were essentially flat for the month, as were both Powerfund Portfolios.