WHAT'S NEW? Our Latest Updates!

Flight to Low Quality

If you recall from the last few issues of the Powerfund Portfolios, we talked about the panic investors felt when the Dow was in the low 7,000's, and how everyone had become severely risk averse. Much money piled into "safe" government bonds, lowering yields. Recently, as the market rallied back sharply, many of these same investors forgot all the things that made them scared in the first place - corporate scandals, a weak economy, looming war and terrorist threats, and lackluster earnings (to name just a few).

October 2002 performance review

The conservative portfolio was up just under 1% for the month of October. The positive action was mostly from the portfolio's stock funds, not the larger bond position, which was flat for the month.

Market Envy

While there has been good news on some economic fronts, the sad fact is most of the activity in the markets is primarily from two forces: 1) the alternatives to stocks are bleak 2) the nagging feeling among investors that they if they don't get in now they could miss out on some action.

November 2002 Trade Alert!

Vanguard High Yield Fund (VWEHX) with proceeds of CMHYX sale.</ul> Columbia funds, which show up in three of our model portfolios because of their high quality and low fees, where snapped up by Liberty, who has been on a fund purchasing binge for some time now. Liberty is merging some of their unbelievably crummy funds into some good Columbia funds to hide the Liberty fund's miserable performance.

September 2002 performance review

The conservative portfolio continues being our best performing portfolio, which is how you'd want a safe portfolio to do in a down market. Dragging it down are weak performance in the few stock funds in the portfolio. We are concerned about the future of bonds given that we see little room for rates to go anywhere but up from these levels.

Theory of Relativity

In the last issue of the Powerfund Portfolios we explained why treasury bonds may start being less of a sure thing, and might even surprise investors by their lousy returns as rates go back up sometime in the future (how's that for a prediction that can't go wrong?). This month we want to get back to the issue on everyone's mind: stocks. Namely, are stocks cheap, and can investors expect to make any money in them anytime soon?

August 2002 performance review

We recently shifted some of our money market allocation in this fund into the very beaten down Vanguard Utilities Income fund. The fund rallied up, then promptly fee in recent market weakness. So far October looks strong for the fund.

Gentlemen Prefer Bonds

How hot are "safe" US government bonds? They were up around 4% in August, after a big run in July amidst the market chaos. In fact, long-term government bonds, the kind the government recently decided they didn't need to issue anymore, are up over 12% this year so far. That's a lot of money to make in a safe investment.

July 2002 performance review

While we were very big on bonds 2 years ago when we first started designing allocation portfolios, we are less enthusiastic today. Bonds have had strong returns in the last two years as interest rates have come down across the board. We feel we are at the bottom of an interest rate cycle.

August 2002 Trade Alert!

We feel the current yield on beaten down utilities stocks of just under 5% is too tempting to pass up. Since money market funds yield less than 2% across the board, often closer to 1%, this should benefit the portfolios over the long term.