Too much of a good thing is the main worry right now. We cut taxes into an already heating up economy which will lead to more inflation which will cause the federal reserve to raise rates higher than they would with no tax cuts. This means higher mortgage and other financing rates — and if those go high enough we could be looking at another recession.

It doesn't seem like what you would want to do in the face of dead-end bonds and fast rising equities globally (not to mention the increasing likelihood of corporate tax cuts), but we may have to take the portfolio's risk levels down a bit soon. Hopefully a risk reduction will be contrarian and not stupid…but the two often walk hand-in-hand.

Stocks were hot and recent bond gains evaporated as investors moved back into risky assets. Interest rate sensitive stocks (like telecom and utilities) were down as well — 10-year treasury bond yields moved from just over 2% in early September to over 2.3% by the end of the month.

Even with the drag of shorting and longer-term government bonds, we had a solid month against benchmarks with the extra boost from some foreign markets. Coincidentally, our conservative portfolio had the exact same return as our Vanguard Star fund benchmark, which is riskier than our conservative model portfolio.