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WHAT'S NEW? Our Latest Updates!

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.

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.