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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.

June 2002 performance review

We've cut back on funds that invest in REITs (real estate investment trusts) compared to our allocations of a couple years ago, as they have had a very good run-up in price since then. We feel the real estate market is long overdue for a correction.

I Fall to Pieces

Tabloid news headlines aside, the real trouble - as it's been for some years now - is valuations. Stocks were priced for perfection when anything but became the market environment. More troubling, stocks were richly valued assuming the numbers (earnings and revenues) were "on the level", which, sadly, they were not.

July 2002 Trade Alert!

The BlackRock International Bond fund, Service class (CIFIX), is closed to new investors. The only classes left are load classes, which we do not recommend. We are replacing the Blackrock International Bond Fund with the American Century International Bond fund (BEGBX). This fund is an excellent low fee fund that is available for No Transaction fee (NTF) through many discount brokers.

May 2002 performance review

Our other value stock pick besides the strong fund is the American Century Equity Income fund. We liked this fund a heck of a lot more a year ago, before it was flooded with new investor assets, but the fund still has some room to grow before it really begins to suffer. We're watching two things right now: asset levels and performance. If this fund breaks about $1.3 billion or so, or if we start seeing a slide in performance, we'll move into one of our backup choices.

April Showers

Any way you slice and dice it, the market is expensive. This is not a new thing. The market has been expensive for at least the last decade, if not longer. We've been complaining about valuations being sky high for years, but that doesn't mean there aren't good categories of funds in which to put your money. You can still invest in a historically overvalued market, and probably should.

April 2002 performance review

The portfolio as a whole has been essentially flat, up just .022%. Stocks were weak this month, but this portfolio has a mere 25% stock position, and that in safer value type stocks. One large move was a - 4.49% pullback for the Strong Dividend Income fund. Since the fund is only 10% of assets, this didn't destroy the portfolios return. 

More of the Same

It wasn't all bad news. Small cap value indexes rose around 3 - 4%. For those keeping track, these types of stocks are now up well over 50% since the large cap indexes hit the skids. That's a pretty big move... for stocks that aren't really growing earnings, broadly speaking.

March 2002 Performance Review

The Conservative portfolio reflects the areas of the world financial markets in which we feel an investor can safely earn a yield with some opportunity for appreciation. We are weighting toward out-of-favor areas like foreign and high-yield bonds, and passing on areas that are traditionally a larger part of a low-risk portfolio (like longer-term US government bonds). We feel those areas have run up to the point where the future potential is weak.