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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.

(Gold) Hoarders, Buried Alive!

I reckon we’ve been talking about this here gold bubble in them thar hills for quite some time. Thankfully, the market gods have finally deigned to demonstrate exactly why we shouldn't be worshiping this particular golden calf. As of this writing, gold is down 27% from the highs it reached in September 2011. It fell 8% on Monday alone.

March 2013 Performance Review

Wow. The S&P 500 and the Dow both reached record highs last month, each breaking previous marks set in 2007. Don’t hold your breath for a new NASDAQ record though – that’s a solid 10-20 years off (and maybe even longer than that if adjusting for inflation). 

The Rocky Path

Many factors could trigger another major slide in the next few years, which is why stocks are intrinsically riskier than most bonds and cash. Yet it's possible to estimate an expected total return over, say, the next 10 years.

February 2013 Performance Review

What we’re really seeing here is the steady erosion in returns of anything other than bonds. Among the worst areas over the last five years – sporting serious negative returns of between 5 and 10% per year on average (as opposed to positive annualized returns of the same magnitude in U.S. stock funds) - are gold mining-oriented and commodities funds. Gold the metal is still higher than 5 years ago, though the yellow metal is finally showing some erosion in price and popularity. 

There's No Perfect Hedge

Someone once said that the only perfect hedge is in a Japanese garden. Here are a few typical strategies for minimizing downside (and upside…) in a portfolio, with some brief notes on the imperfections of each, especially in light of an ever-shifting landscape.

January 2013 Performance Review

All this upside is starting to attract attention. Investors are warming to stock funds again. This tends to happen shortly before market dips, and if bonds continue to slide as stocks rise we would expect to cut back on equities and shift a little more to debt, but currently stocks are still more appealing valuation-wise than bonds are.

2012 Review - Looking Back, Going Forward

Although the European economy appears to be on the mend, with  some of the biggest financial misfit euro-area countries now able to borrow again, U.S. hijinks should continue for much of 2013, since many of the decisions that need to be made about the debt ceiling and spending cuts were largely kicked down the road for later theatre. Are you not entertained?

December 2012 Performance Review

Investing in markets that seem poised to plummet can be more rewarding than investing when things seem safe. Sadly many investors bailed out of stock funds in recent years. Good news on the bad news front: most every serious financial problem facing America was just kicked down the road.