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August 2013 Performance Review

Stocks and bonds sunk in August, which makes it difficult for a portfolio made up of both to perform well. Of all the things investors worry about, the high correlation of all asset classes is the most distressing, and most likely.

Trade Alert

We executed a trade in both the Conservative and Aggressive Powerfund Portfolios on August 15th, 2013. 

Trades in Both Portfolios

Stocks have been going great guns since we hit the bottom of the financial meltdown in March 2009. We generally try to increase our stock allocation on the way down and cut back on stocks as they climb and investors grow more optimistic.

July 2013 Performance Review

The June Swoon proved temporary as stocks rebounded to new highs in July. Even previously lackluster foreign stocks joined the party as both U.S. and foreign larger stocks rose just over 5%. Emerging market stocks weren’t in a festive mood though – they continued to underperform returning less than 1% in July. Bonds were mostly flat after sliding in recent months.

Second Quarter Review

Our own relatively small foreign stock and cash allocations kept our portfolios more or less in line with a blend of U.S. stock and bonds. Our sharp underperformers (longer-term bonds and foreign markets) were balanced by good gains in financials, Japanese stocks, and healthcare. Still, it was no quarter to brag about. 

June 2013 Performance Review

Almost all yield-oriented foreign investments were already sliding, and U.S. stocks finally got caught up in the downdraft. The S&P 500 fell 1.35%, although the drop in the index was better than the average returns in essentially all categories of funds except short term bonds and small cap growth, including many of our own holdings. It was a bad month to be diversified.

A Distinct Lack of Interest

Predictions about rates having nowhere to go but up might have looked equally correct half a dozen times in recent years – yet been wrong.

May 2013 Performance Review

Interest rates jumped, creating fears the end of falling rates is finally here. This took the entire bond market down almost 2% with a bit more damage to longer-term bonds (notably government bonds) which dropped almost 7%. High yield bonds, which are sensitive to interest rates but also to rising stocks and an improving economy, were down around a half percent. 

Crash Redux

With the market maintaining a perpetual upward trajectory in 2013, it could be time to revisit our theories about crashes and market peaks.

April 2013 Performance Review

How did we beat BOTH the stock and bond indexes in April? Many of the out-of-favor areas we hold rapidly became favorable - notably Japan and telecom (both up over 8%).  Utilities were up almost 6% AND interest rates were down again, sending our longer-term bond fund up. Best of all, commodities tanked which boosted our oil short – usually up only when stocks are down.