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February 2004 performance review

For the conservative portfolio we sold our 5% position in the Northern Income Equity (NOIEX) fund. We originally added this fund in April 2002 and the fund was up 13.5% over that time period. Convertible bonds benefit from upward movements in stock prices as the value of the conversion feature increases. Convertible bonds yield less then comparable risk corporate bonds because of this upside potential. As stock prices are back to fully valued, we think the below average yield will hold back portfolios going forward.

March 2004 Trade Alert!

We’re lowering our risk level slightly by moving some profits into more conservative investments. Stocks (particularly foreign stocks), convertible bonds tied to stocks, and foreign bonds have all risen in the last year. The reward for risk taking will be lower going forward.

Why We Sold

The main reason we don’t trade actively is that our fund investing strategy is reasonably long-term – when we like an area of the market or category of fund we usually like it for reasons that are anything but trendy. 

January 2004 performance review

With a larger equity stake then the safety portfolio, the conservative portfolio was up 1.42% in January. Utility stocks were strong, as they usually are when interest rates fall. The American Century Utility Income fund (BULIX) was up 1.8% for the month.

Where are the Munis?

We discussed many of the issues you need to think about when managing your portfolio in a past newsletter. One more area of interest by subscribers as tax season approaches is municipal bond funds. We don’t have any of them in our model portfolios. Why not, and should you own some?

December 2003 performance review

In December the Conservative portfolio climbed 3.45% to end the year up 19.2%. More conservative stocks were hot in December, of the ilk found in the Vanguard Dividend Growth fund (VDIGX) – the fund was the best performer in the portfolio, up just over 6%.

The Bland Science

Economics is the science nobody cares about until the economy stumbles. When it does, everyone wants to know why unemployment is rising and why their stocks are falling. Humans like to hear answers to unanswerable questions. It’s why some cultures had a god of rain they would pray to during the dry seasons.

November 2003 performance review

Japan was weak in November as a category, giving back a little of its strong recent gains. The Growth Portfolio’s T. Rowe Price Japan fund was down just under 5%. One question in the great recovery in long downtrodden Japanese equities is this: how well can a primarily export driven society do if our dollar keeps falling making their goods more expensive?

How to Marry a Model

All seven MAXadvisor model portfolios have had great years, but they won’t make any of our subscribers any money if nobody actually invests in them. To make the model portfolio investing process as easy as possible, we’ve developed this short guide. 

October 2003 performance review

October was strong for stocks and weak for bonds. The Conservative portfolio was up 1.76%, not bad given its large bond stake. Stocks are just a 30% allocation here, so investors shouldn’t expect big upward movement just because stocks are hot.