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May 2022 Performance Review

June 5, 2022

A late-month rebound in stocks stopped May from being as bad as April. This reversal is probably because interest rates took a break from the dramatic rise this year, a rise that has taken most bond funds down 5%—20% in value. Foreign stocks did a little better last month than the tech-heavy US market, which has been under significant pressure since this market turned south at the beginning of this year. May was a good month for our portfolios, especially relative to US markets.

Our Conservative portfolio gained 1.50%, and our Aggressive portfolio gained 2.12%. Benchmark Vanguard funds for May 2022 were as follows: Vanguard 500 Index Fund (VFINX), up 0.18%; Vanguard Total Bond Index (VBMFX), up 0.58%; Vanguard Developed Mkts Index (VTMGX), up 1.73%; Vanguard Emerging Mkts Index (VEIEX), up 0.62%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 0.69%.

We're still down almost 10% in our Conservative portfolio YTD, which is a rough year compared to the 12.78% hit to the stock market. Our Aggressive portfolio is down a more respectable 5.22% for the year.

Much of the froth in the stock market around supposedly innovative stocks of the future is now gone, although many still need to go to zero like in the 2000—2002 washout. The most trendy growth stocks are now mostly down 50%—90% from highs. The Nasdaq was recently down shy of 30% year to date before the recent rebound (still down over 20% YTD). For the record, the Nasdaq was down around 40% in 2000—the year the tech bubble popped—though, from the peak in March 2000, the Nasdaq fell around 50% (and 75% top to bottom in 2002). Last month, technology-oriented funds were down about 3% and 28% for the year.

In general, stock valuations globally aren't that bad. This will likely only be a good entry point if interest rates stick around these levels and we avoid a recession. Safe bonds are now reasonably priced at roughly 3% yields. Although 3% sounds like a terrible deal with near 10% inflation, the days of almost guaranteed positive returns adjusting for inflation in safe assets are gone. One way or the other, inflation will return to sub 3%, and bonds should more or less break even with inflation. We remind you to buy your yearly allotment ($10k max per person) of Series I Savings Bonds direct from the US Treasury.

If inflation doesn't start to fall, global central banks will have to keep punishing the market—not just the stock market but the housing market. In theory, if governments raised taxes and cut spending, we'd get a balance in supply and demand, but in practice the Fed is probably going to have to raise rates higher than inflated asset prices can handle.

We're close to moving back out on the yield curve to longer-term bonds—into the fire. The next leg down in bonds will likely be high-yield junk bonds—the authentic proof a recession is around the corner. We may also increase our foreign stock allocation, though there will be no immunity from a recession by investing abroad.

All of our holdings except Vanguard Extended Duration Treasury (EDV), which was down 4.03% last month (and down 21% since added back to portfolios in February), beat the S&P 500 in May (except our short QQQ fund), which reflects how much of this slide is tied to mega-cap US growth stocks. Our top performer last month was the recently volatile Franklin FTSE Brazil (FLBR), up 7.15%. In theory, this fund will be a winner from high global commodity prices that need to come from places that are not Russia, but there is risk in any emerging market for a worldwide recession that lowers all prices. This fund would be a good holding for a soft landing economically, meaning one where central banks can ease us off high inflation without a deep recession.

Our second-best holding was Franklin FTSE Germany (FLGR), up 5.16%, rebounding off a significant drop this year. With increasing talk of cutting way back on Russian energy, Germany is in a precarious position economically now. The one that got away, energy funds are still delivering this year as oil goes ever higher on a still-hot economy with supply issues. Energy funds are the top area this year, up 45% for the year and 13% last month. Too bad we cut back a few months ago. The worst place is digital asset-oriented funds, down around 50%. Too bad they didn't make a crypto token backed by oil instead of ones supported by... another crypto (and now down 99.9%).

Other big losers for the month include real estate funds, down around 5% as rising rates and a slowing economy place risks on this area beyond making the yield less attractive. It is still unclear what is going to happen to commercial real estate if this hybrid work structure sticks because, long term, it will create a glut in office space that won't be easy to fix with lower rates, unlike the last crash in commercial real estate.

Our third best holding Vanguard Utilities (VPU), up 4.51%, is due for a cut as investors swinging out of risky growth stocks have landed on safe income stocks, and the relative value is falling fast here.

The next shoe to drop, if there is one, will be high-yield bonds, notably floating-rate debt that investors feel is safe because the yields reset with short-term rates. The trouble in this area, which we do not have direct exposure to as in floating rate or bank loan funds, is shaky as companies won't be able to make these payments if rates rise too far, especially if we get a weak economy and high short-term rates. The good news is the loan you made to me now pays 7%, not 4%. The bad news is I can't afford 7%. Defaults will go up, way up.

There is a broader issue here with our margin loan economy. With low rates below inflation and far below historical price increases in real estate and stocks, it made sense to borrow against your stocks to buy real estate or just have money to spend. Why pay tax selling stocks that should go up 5%—15% a year forever when you can borrow against this portfolio at 3%, tax-deductible? Stock-backed loans are how many tech billionaires avoid tax and finance lavish lifestyles for a long time. Recently this financial engineering has been marketed to the rich but not the island-owning rich by banks. Such securities-backed loans are everywhere on balance sheets, on top of the near trillion dollars in ordinary stock margin loans, a record.

The banking system seems secure because today's real estate loans are much safer. Low down payment adjustable rate "loser" loans to those lying about their income (No Income, No Job NINJA loans) are more or less gone from the system. Now the homes are backed by solid folks sitting on millions in stocks.

This is all fine and dandy until stocks fall 50% or more. We may never expose this weak link in the economic chain, but if we do, it could be as bad for real estate and stocks as 2008. It has been quite some time, 1929 to be exact, since excessive stock leverage has led to economic and market problems. Banks don't remember, but customers with high credit scores swimming in assets can default quickly as subprime borrowers if conditions turn very dark.

In the meantime, the Fed isn't going to be there to support a crash unless inflation cools off. The market, for the first time in 30+ years, is flying without an insurance policy.

Stock Funds1mo %
Franklin FTSE Brazil (FLBR)7.15%
Franklin FTSE Germany (FLGR)5.16%
Vanguard Utilities (VPU)4.51%
ProShares Decline of Retail (EMTY)4.28%
Vanguard FTSE Europe (VGK)2.41%
Homestead Value Fund (HOVLX)2.41%
Vanguard Value Index (VTV)2.41%
Franklin FTSE China (FLCH)2.25%
VanEck Vectors Pharma. (PPH)2.17%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)1.73%
Franklin FTSE Japan ETF (FLJP)1.72%
Vanguard FTSE Developed Mkts. (VEA)1.65%
Invesco CurrencyShares Euro (FXE)1.64%
Franklin FTSE South Korea (FLKR)1.42%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)0.62%
[Benchmark] Vanguard 500 Index (VFINX)0.18%
ProShares UltraShort QQQ (QID)-1.15%
Bond Funds1mo %
Vanguard Mortgage-Backed Securities (VMBS)0.91%
[Benchmark] Vanguard Total Bond Index (VBMFX)0.58%
iShares JP Morgan Em. Bond (LEMB)0.48%
Vanguard Long-Term Bond Index ETF (BLV)0.23%
Vanguard Extended Duration Treasury (EDV)-4.03%

April 2022 Performance Review

May 5, 2022

Ouch. Global markets are not in the mood to fight inflation, and the market reaction to the Fed press conference of May 4th only highlights the growing fear of the world of waning global monetary stimulus. Stocks and bonds were down sharply across the board in April as inflation shows no signs of abating without action — the kind that slams the economy and markets. The real story isn't the near-double-digit hit to stocks, but the near-double-digit hit to bonds. These fears are rational. Inflatable assets like commodities, real estate, and stocks often do very badly when inflation heads back down. Bonds do badly when inflation isn't in check. If both are down, then the assumption is that the higher rates in the bond market are going to "work" in cooling inflation.

Our Conservative portfolio declined 5.72%, and our Aggressive portfolio declined 5.54%. Benchmark Vanguard funds for April 2022 were as follows: Vanguard 500 Index Fund (VFINX), down 8.72%; Vanguard Total Bond Index (VBMFX), down 3.85%; Vanguard Developed Mkts Index (VTMGX), down 6.55%; Vanguard Emerging Mkts Index (VEIEX), down 5.55%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 7.43%.

In hindsight, when we cut back on inflation-adjusted bonds (which we went into last year when rates and inflation were low), we should have just parked half the portfolio in cash instead of mortgage bonds. Like everyone, we were scared of nearing zero on cash for years waiting for higher rates or lower stock prices. Well, higher rates came fast — about as fast as the 1994 and late 1999 bond mini crash. Long-term government bonds were down about 9% in April — more than stocks — and are down around 20% for the year as of now. The good news for investors is now you can earn 3% safely. Over time, this is better than if rates remained 1%.

Before you get too scared, keep in mind the bond market isn't going to fall 50% like stocks can from here. Some ultra-long-term zero coupon government bonds may fall briefly. If bonds fall much harder, it will be brief, at least for government bonds. In such a crisis, the Fed would switch to money creation and bond buying again (and hasn't even started selling off the bonds purchased with new money during the COVID crash).

This is a leveraged world with sky-high asset prices based on low rates. The U.S. government can't afford our debt at 7%, and neither can anybody else. The "good" news for the government is they just inflated away 10% of the debt or maybe $2 trillion. Without almost guaranteed inflation of over 5% a year, nobody can afford to buy a high-priced home with a 7% mortgage. Sure we've had 10% mortgages "in the past," but then homes were priced at 2 times average incomes; today it is more like 4 times. In many hot real estate markets, that number is 10 times.

Current bond yields are actually not a bad deal in the long run as we will likely, hopefully, return to sub-3% inflation, and in general low default risk bonds probably won't pay more than inflation for long periods of time ever again — as we've noted here before.

Some commodity funds were up a little last month, but 99% of fund categories were down. Commodity funds won't do well if inflation heads back down and we get a recession, but they will do well if inflation remains above 4% with the economy remaining hot. The hardest hit areas included foreign stocks and growth stocks. Tech stocks are in a bear market, and technology category funds are down close to 25% for the year. As noted before, this doesn't even capture the full-on 2000 grade crash in stocks of the future or so-called innovation investments. These are now down 50% to 90%. Many will go to zero.

Our inverse Nasdaq fund is finally paying off with a 45% gain YTD. This has partially offset big losses in bonds and stocks, notably in our remaining long-term bonds and foreign stocks. Our China fund Franklin FTSE China (FLCH) is down 19.46% for the year. As proof of the pain in bonds, our Conservative portfolio is down 10.95% for the year, while our Aggressive portfolio is down just 5.54%, as opposed to the near 13% drop in the Vanguard 500 fund and a whopping 13.81% year to date drop in Vanguard Star Fund (VGSTX), which highlights the hard hit to bonds and foreign stocks this year. That's right, diversifying into bonds and foreign stocks actually increased downside in 2022, so far. Our strongest areas include VanEck Vectors Pharma. (PPH), down just 2.25% for the month and up 1.31% for the year, followed by utilities, which were basically flat for the year after Vanguard Utilities (VPU) slid 4.38% for the month.

The Federal Reserve Chairman press conference from April 4 made little sense. Initially, there was a massive spike in stocks, which (so far) abruptly reversed on April 5 during one of the wildest two-day sessions in a long time.

The Fed is in a tough spot. They probably feel that this inflation is sort of phony as it results from distortions in supply and demand and that if they react to aggressively it will cause a depression, yet they can't keep saying "transitory" and doing nothing. Imagine if the government decreed three-day weekends for workers for a year and sent bonus checks to all workers every few months. We'd have inflation. Should the Fed raise rates and cause a recession to fix it? Isn't the fix either get used to higher prices as supply and demand adjust or go back to work 5 days a week and stop sending stimulus checks (or deferring loan payments)?

The gist of the message from the first in-person Fed press conference since COVID was that the legislators aren't to blame even though they are the ones who handed out checks and encouraged working less during shutdowns. The high inflation is all the Fed's world — and the Fed will deal with it. No more Mr. Nice Rate Guy — inflation must be brought down to save the little guy. We don't work for Goldman Sachs! This strong message was followed up with fairly weak action and a near guarantee that shorter term rates won't go up that fast or that much — because we sure don't want to cause a recession to fight the worst inflation in 40 years.

The wild card to higher rates is the increasingly bizarre government support of stretched consumers and borrowers. There is no telling what a pandering state or federal government will do if mortgage rates hit 6% on a 30-year fixed rate mortgage — already well over 5%, which is a big move up from around 3% or lower just a few months ago. Perhaps we'll get checks in the mail to subsidize bigger mortgage payments for new home buyers — why not? We got oil released from the Strategic Petroleum Reserve and essentially handouts to car owners in CA and gas tax breaks in Republican states because gas prices went up. The consumer must always be coddled! Higher prices and rates won't work in slowing demand if we get subsidized for high prices.

Bottom line, in the short run, rates may go up more to counter the Fed's lazy response to inflation caused by Congress. Bond holders are getting nervous. This will start hitting stocks harder than bonds, though we could see a bond fund rush to the exists (again). Ultimately we'll slide into a recession if rates get too high, and bonds will go back up with rates down as inflation fears morph into deflation fears (again).

If the federal government isn't going to address inflation caused by supply and demand imbalances, the Fed needs to raise short-term rates faster than planned to prevent long-term rates from going up too fast — basically reassuring bond investors that inflation is going away so you can safely buy a 3% government bond. Losing the long end means 6% mortgages and recession.

Stock Funds1mo %
ProShares UltraShort QQQ (QID)29.91%
ProShares Decline of Retail (EMTY)0.99%
VanEck Vectors Pharma. (PPH)-2.25%
Vanguard Utilities (VPU)-4.38%
Invesco CurrencyShares Euro (FXE)-4.72%
Vanguard Value Index (VTV)-4.79%
Franklin FTSE China (FLCH)-5.17%
Homestead Value Fund (HOVLX)-5.51%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-5.55%
Vanguard FTSE Europe (VGK)-6.25%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-6.55%
Franklin FTSE South Korea (FLKR)-6.62%
Vanguard FTSE Developed Mkts. (VEA)-6.79%
Franklin FTSE Japan ETF (FLJP)-7.86%
Franklin FTSE Germany (FLGR)-8.01%
[Benchmark] Vanguard 500 Index (VFINX)-8.72%
Franklin FTSE Brazil (FLBR)-13.21%
Bond Funds1mo %
Vanguard Mortgage-Backed Securities (VMBS)-3.59%
[Benchmark] Vanguard Total Bond Index (VBMFX)-3.85%
iShares JP Morgan Em. Bond (LEMB)-4.71%
Vanguard Long-Term Bond Index ETF (BLV)-9.49%
Vanguard Extended Duration Treasury (EDV)-12.57%

March 2022 Performance Review

April 5, 2022

U.S. stocks shrugged off their slide of over 10% this year with a strong 3.7% jump in the S&P 500 in March. The Nasdaq, heavy in growth stocks, rebounded from a short-lived 20% drop — technically in bear market territory. At the end of March the S&P 500 was down just under 5% for the year, and the Nasdaq just under 10%. With bonds and foreign stocks mostly down around 6% for the year, diversifying isn't helping.

Our Conservative portfolio declined 0.55% and our Aggressive portfolio gained 0.80%. Benchmark Vanguard funds performed as follows in March 2022: Vanguard 500 Index Fund (VFINX), up 3.70%; Vanguard Total Bond Index (VBMFX), down 2.83%; Vanguard Developed Mkts Index (VTMGX), up 0.30%; Vanguard Emerging Mkts Index (VEIEX), down 2.47%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 0.23%.

Our Aggressive portfolio is down just 1.74% for the year but our Conservative portfolio is down 5.55%, more in line with benchmarks. Longer-term bonds have been the biggest drag on our Conservative portfolio, with drops of 13.06% and 10.47% over the past three months in Vanguard Long-Term Bond Index ETF (BLV) and Vanguard Extended Duration Treasury (EDV) respectively, though our shorter-term bond funds, such as the recently added Vanguard Mortgage-Backed Securities (VMBS), are also down just under 5% for the year. Other losers include Franklin FTSE Germany (FLGR), down 13.4% in 2022; Germany, as a major destination for Russian oil and natural gas, is the EU country with perhaps the most financial risk from the war in Ukraine. There is almost no scenario in which Russia sees a major impact on inflows of money without Germany seeing an energy shortage. It is akin to our own problems with the OPEC embargo in the 1970s.

Besides shorts, support to our Aggressive portfolio was provided by VanEck Vectors Pharma. (PPH) and Vanguard Utilities (VPU). Safer stocks are doing well, especially relative to speculative growth stocks with little or no earnings. Such former high flyers are down on average by over 50% from their 2021 highs, though they have rebounded during the latest dip buying.

The one-month return for Franklin FTSE Brazil (FLBR) was an astounding 14.38%, completing a 34.78% return for the quarter. Brazil has already benefited from high energy and commodity prices in recent months, and is a likely source for many exports currently coming from Russia. Our biggest misses this year are exiting inflation-adjusted bonds and energy stocks too soon, though inflation-adjusted bond funds are still down for the year — just not quite as much as other bond funds.

Energy funds are the top performing category for the year, up about 33%. China funds are down for the month and year, and our Franklin FTSE China (FLCH) holding was down 9.69% for the month and 15.07% for the year. There has been a huge rebound in Chinese stocks in recent weeks, off a much lower low. It appears that the Chinese government is easing its crackdown on tech company power. We may increase this stake. There are lingering fears that a property bubble has already popped, and that the damage will not be repaired easily. Many stocks face delisting in the U.S. market for not meeting our regulatory standards. There is also the possibility of China siding with Russia sufficiently to trigger significant sanctions. But it is unlikely that companies will write off business in China — a huge part of the supply chain and of many companies' revenues — as quickly as the West did with Russia, a much smaller economy with limited business ties to the U.S.

If this recent dip buying is to work out, we will have to see higher interest rates not crushing the economy into recession, as has often happened. The yield curve recently went negative, meaning that two-year Treasury bonds now yield more than ten-year bonds. This usually happens when a recession is near and investors don't expect inflation or growth in a recession. We're already seeing 30-year mortgage rates approach 5%, which is a big increase from recent months at around 3%. So far this hasn't hit the roaring real estate market.

In a real speculative mania economy, Federal Reserve rate hikes don't hit the speculation right away, only the 'real' economy. If investors are convinced they will make 10% a year or more in stocks, real estate, and now crypto, then whether it costs 3% or 6% or 9% is not that relevant, so long as loans are available. There are already signs that banks are loosening lending requirements, adjusting to the higher mortgage payments. We're not quite at negative amortization NINJA loans (no income no job) but we're moving slowly in that direction.

Stock Funds1mo %
Franklin FTSE Brazil (FLBR)14.38%
Vanguard Utilities (VPU)9.78%
VanEck Vectors Pharma. (PPH)5.35%
[Benchmark] Vanguard 500 Index (VFINX)3.70%
Vanguard Value Index (VTV)3.28%
Homestead Value Fund (HOVLX)1.72%
Vanguard FTSE Developed Mkts. (VEA)0.68%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)0.30%
Vanguard FTSE Europe (VGK)0.16%
Franklin FTSE South Korea (FLKR)-1.32%
Invesco CurrencyShares Euro (FXE)-1.41%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-2.47%
Franklin FTSE Japan ETF (FLJP)-2.50%
Franklin FTSE Germany (FLGR)-2.56%
ProShares Decline of Retail (EMTY)-4.38%
Franklin FTSE China (FLCH)-9.69%
ProShares UltraShort QQQ (QID)-10.92%
Bond Funds1mo %
iShares JP Morgan Em. Bond (LEMB)-2.38%
Vanguard Mortgage-Backed Securities (VMBS)-2.47%
[Benchmark] Vanguard Total Bond Index (VBMFX)-2.83%
Vanguard Long-Term Bond Index ETF (BLV)-3.98%
Vanguard Extended Duration Treasury (EDV)-6.38%

February 2022 Performance Review

March 8, 2022

Just when it felt like we were exiting one global economic problem, we're confronted with another. Within just a few days, the Russia—Ukraine war has already decimated Russian stocks and now seems to be spreading into other markets, notably Germany, the most strongly linked economically to Russia, likely foreshadowing economic problems to come. The S&P 500 was down 3%, and with the action in early March is down over 10% for the year, joining other markets and indexes already down that much or more. Bonds were weak as well, particularly foreign and emerging markets bonds. Once again, bonds offer no offsetting gains from falling stocks, just less downside. Such is the dilemma of low rates.

Our Conservative portfolio declined 2.21% and our Aggressive portfolio declined 1.63%. Benchmark Vanguard fund movements in February 2022 were as follows: Vanguard 500 Index Fund (VFINX), down 2.99%; Vanguard Total Bond Index (VBMFX), down 1.13%; Vanguard Developed Mkts Index (VTMGX), down 2.47%; Vanguard Emerging Mkts Index (VEIEX), down 4.27%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 2.42%.

Our Aggressive portfolio did well against the market for the month and is doing well for the year. But our Conservative portfolio, without the benefit of shorts and with too much exposure to Europe, given the rising risks in the region, fell by almost as much as the broader market. At the end of February the S&P 500 was down 8.02% in 2022 (with dividends, as measured by the Vanguard 500 fund) while our Conservative portfolio was down 5.03% and our Aggressive portfolio just 2.52%.

It was a month in which we wished we still owned our energy fund, as that fund category's 20% return was about the only strong area in the global market last month. The second best area was Latin American stocks, which we do own. They are an energy and commodity play of sorts, though this region is falling with emerging markets now.

Energy is at the center of this crisis. Europe is not really capable of getting by without Russian oil and gas, given the tight supplies and strong economies globally. Everything that goes in and out of Russia seems liable to attract punishing sanctions, except its primary source of revenues — energy. Limited sanctions won't keep Russian commodities off the market entirely anyway, they'll just be sold to different buyers.

Our dollar has climbed, as it often does during a crisis, which hurts foreign investment returns. This will eventually create even better opportunities to invest abroad. It is possible we will cut back on European stocks and increase our foreign stock stakes in coming weeks or months, but the timing will be a crapshoot. China was weak, as were emerging market stocks and bonds. Nobody knows where economic contagion will appear.

It is noteworthy that the last time Russia had a financial crisis, in 1998, it wasn't the hit to the Russian stock market that was the issue so much as hedge funds that were gambling on risky debt. It ultimately led to a bailout of sorts, orchestrated by the Federal Reserve, and a brief but significant slide in stocks worldwide.

Unlike Russia, which has been shoring up its finances for years in preparation for trouble (apparently of its own making), America and Europe borrowed and spent to support the last crisis. The notion of supporting another recession this soon is not in the financial cards. Another wild card is the Federal Reserve, which until a few weeks ago was going to raise interest rates to end the worst inflation in decades. Before this latest slide, U.S. stocks were actually rebounding on hopes we don't get a rate increase because of the Russia situation, as if slightly lower rates can magically support stocks regardless of serious global economic problems. The case can be made that rates should go higher, to slow the economy and inflation and drive energy and commodity prices down.

There will be some opportunities but this problem is likely to get worse before it gets better. Most high-flying, low earnings growth stocks were already down around 50% from their peaks last year. This new trouble is driving down the rest of the global market.

Stock Funds1mo %
ProShares UltraShort QQQ (QID)6.70%
Franklin FTSE Brazil (FLBR)3.94%
ProShares Decline of Retail (EMTY)3.08%
Franklin FTSE South Korea (FLKR)0.45%
VanEck Vectors Pharma. (PPH)-0.18%
Invesco CurrencyShares Euro (FXE)-0.32%
Vanguard Value Index (VTV)-1.15%
Franklin FTSE Japan ETF (FLJP)-1.44%
Homestead Value Fund (HOVLX)-1.86%
Vanguard Utilities (VPU)-1.87%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-2.47%
Vanguard FTSE Developed Mkts. (VEA)-2.65%
[Benchmark] Vanguard 500 Index (VFINX)-2.99%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-4.27%
Vanguard FTSE Europe (VGK)-5.29%
Franklin FTSE China (FLCH)-5.81%
Franklin FTSE Germany (FLGR)-8.86%
Bond Funds1mo %
Vanguard Mortgage-Backed Securities (VMBS)-1.08%
[Benchmark] Vanguard Total Bond Index (VBMFX)-1.13%
Vanguard Extended Duration Treasury (EDV)-2.52%
Vanguard Long-Term Bond Index ETF (BLV)-2.60%
iShares JP Morgan Em. Bond (LEMB)-4.23%

January 2022 Performance Review

February 2, 2022

In January, the roughly 50% crash in higher flying mania stocks that started earlier in 2021 finally spread to the rest of the stock market — the market with earnings. The current explanation is the market doesn't like all this talk of raising rates to trim inflation as it could work a little too well and hurt the economy, stock market, and real estate. The bond market took a hit as rates rose in anticipation of less support from the Federal Reserve. Foreign markets were a little stronger as their relative value may have offered some support to suddenly high-valuation-shy investors.

Our Conservative portfolio declined 2.88%, and our Aggressive portfolio declined 0.90%. Benchmark Vanguard funds for January 2022 were as follows: Vanguard 500 Index Fund (VFINX), down 5.18%; Vanguard Total Bond Index (VBMFX), down 2.19%; Vanguard Developed Mkts Index (VTMGX), down 3.95%; Vanguard Emerging Mkts Index (VEIEX), up 0.42%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 4.35%.

From the peak in early January, the US market promptly fell 10% — a correction by Wall Street's overly positive terminology. Then, as fast as the slide, the dip buying kicked in, with a roughly 5% move up in the last few days of the month through the end of February 1, leaving the S&P 500 down only 5.18% for the month.

Our returns relative to the benchmarks were good, though giving energy funds the heave-ho late last year was a tad early as we missed the hottest fund category of January. Recently sold Vanguard Energy (VDE) was up 17.48% last month. All was not lost. Latin America funds, themselves heavily influenced by rising commodity prices, were one of the few hot areas in January, taking our holding Franklin FTSE Brazil (FLBR) up 13.37%.

About 90% of fund categories were down in January, but the hardest hit areas were growth stocks, with only modest losses in value stocks. While emerging markets as a group were basically flat to slightly down, single regions differed wildly. South Korea dragged on our returns by underperforming the S&P 500, but in general all our other funds beat the falling US market.

Bonds were hit hard, which largely explains why our Conservative portfolio fell harder than our Aggressive portfolio. This is the danger of relying too heavily on bonds for safety in a high-inflation, low-interest rate environment. Normally in a 10% down period for stocks, bonds would do well offsetting losses. Now rising rates are dragging on stocks. Our riskier bond fund, iShares JP Morgan Em. Bond (LEMB), was our only bond fund with a positive return (0.66%). The rest sank with Vanguard Extended Duration Treasury (EDV) at the bottom of the barrel, down 4.73%, followed by Vanguard Long-Term Bond Index ETF (BLV) down 4.27% — around double the broader bond market's drop.

Inflation-protected bond funds took a hit as well, down around 1.7% for the month, as the expectation is that the Fed will raise rates and it will likely put a lid on inflation, giving investors no more protection than regular bond funds at this point — only with the potential for greater losses than non-inflation-adjusted government bonds if the Fed is a little too successful in stamping out inflation. Our recent move out of inflation-adjusted bonds into regular safe bonds offered no benefits here, as both sank in January.

Even with the 50% crush in speculative stocks including SPACS, meme stocks, Crypto, so-called stonks, and earning-less stocks of the future, the broader stock market is hardly a cheap market. In theory, high inflation and low rates mean stocks have a shot of growing into their elevated valuations.

Nobody knows where rates and inflation are going to go, but a soft landing may not be on the cards this time around. Covid stimulus spending is fast waning, and sub-3% mortgage rates are in the rear-view mirror.

There could also be a wealth effect loss from all the trillions of paper wealth that has disappeared in a few months. A 5% hit to your 401k isn't going to drag the economy down. A 50% hit to your Robinhood account may. We're all lucky this speculative bubble didn't get any bigger than it did last year or we'd be looking at a repeat of 2008, when falling real estate took the whole kit and caboodle down with it.

This 10% drop may just be another in the long line of dips to buy. Historically, when an underlying bubble is popping, 10% is only the beginning of a bigger drop. 2000 dot com bubble, 2007 real estate and bubble, 2021 crypto and crappo stocks? We'll see.

Stock Funds1mo %
ProShares UltraShort QQQ (QID)17.39%
Franklin FTSE Brazil (FLBR)13.37%
ProShares Decline of Retail (EMTY)8.92%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)0.42%
Franklin FTSE China (FLCH)-0.16%
Vanguard Value Index (VTV)-1.07%
Invesco CurrencyShares Euro (FXE)-1.30%
VanEck Vectors Pharma. (PPH)-1.44%
Franklin FTSE Germany (FLGR)-2.47%
Homestead Value Fund (HOVLX)-2.94%
Vanguard Utilities (VPU)-3.36%
Vanguard FTSE Europe (VGK)-3.58%
Vanguard FTSE Developed Mkts. (VEA)-3.86%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-3.95%
Franklin FTSE Japan ETF (FLJP)-4.02%
[Benchmark] Vanguard 500 Index (VFINX)-5.18%
Franklin FTSE South Korea (FLKR)-7.78%
Bond Funds1mo %
iShares JP Morgan Em. Bond (LEMB)0.66%
Vanguard Mortgage-Backed Securities (VMBS)-1.48%
[Benchmark] Vanguard Total Bond Index (VBMFX)-2.19%
Vanguard Long-Term Bond Index ETF (BLV)-4.27%
Vanguard Extended Duration Treasury (EDV)-4.73%

December 2021 Performance Review

January 5, 2022

If ever there was a year for American exceptionalism, it was 2021. Our vaccines, if not our deployment, were at the top of the global heap (with some help from Germany). Our stock market as measured by the S&P 500 delivered a remarkable 28%+ return for the year, while the main foreign developed markets index was up around 8%.

For the year, we were up 10.85% in our Conservative portfolio, and 11.35% in our Aggressive portfolio — solid, except when you look at the US stock market, and then it was a miss, even adjusting for the 1.86% negative return in the total bond index fund for 2021. The slightly riskier Vanguard Balanced Index (VBINX) was up 14.09% in 2021, to get an idea where a 60/40 stocks to bonds with no foreign stocks portfolio did last year. And yes, we're in the sort of overheated market where you have to apologize for double-digit returns not measuring up…

For the last month of the year, our Conservative portfolio gained 2.29% , and our Aggressive portfolio gained 2.97%. Benchmark Vanguard funds for December 2021 were as follows: Vanguard 500 Index Fund (VFINX), up 4.48%; Vanguard Total Bond Index (VBMFX), down 0.41%; Vanguard Developed Mkts Index (VTMGX), up 4.80%; Vanguard Emerging Mkts Index (VEIEX), up 1.74%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 1.37%.

This was one of the few years recently that we beat Vanguard Star Fund (VGSTX), a global balanced fund. At around 63% stocks (and about two thirds of that US stocks), it is a little riskier than our portfolios these days but is the main benchmark we try to beat. When the market is down, like in 2018, we fell by less. This fund was up 9.65% in 2021.

We beat this top low-cost global fund partially because we had some areas that outperformed the S&P 500 in 2021, like our recently sold Vanguard Energy (VDE) and Vanguard Small-Cap Value (VBR), and our bond picks were inflation adjusted and had gains while the overall bond market was down. We also rebalanced out of some hot areas like Franklin FTSE South Korea (FLKR) early in the year, booking some gains in areas that weakened as the year progressed.

In December some of our holdings took off, boosting our relative return, notably Vanguard Utilities (VPU) which was up a whopping (for utilities stocks) 9.42% for the month right after we increased the allocation from 5% to 10%. VanEck Vectors Pharma. (PPH) was up 7.74% in what seems to be a move out of trendy, no-earnings stocks to safe, higher-dividend, older stocks.

Current holdings that did well in 2021 were Homestead Value Fund (HOVLX) and Vanguard Value Index (VTV), both value funds up just shy of the S&P 500 with 25% and 28.6% returns, respectively. The only fund categories to beat the S&P 500 in 2021 were energy (#1) and other natural resources, real estate, small cap value, and financials. Our recently sold Vanguard Energy (VDE) holding was up 56% for the year. Losers in 2021 were most emerging markets; notably, Latin America and China. Our own holdings Franklin FTSE Brazil (FLBR) and Franklin FTSE China (FLCH) were down 17.12% and 20.81% for the year, with a basically flat year for emerging markets.

Foreign stocks — notably China, the # 2 largest economy — started to sink after the big rebound off the Covid-crash lows while US stocks remained on the up and up. Much of this was currency fluctuations, but in general, foreign stocks have wildly underperformed US markets even looking at currency-hedged funds; notably, emerging markets.

When you buy a total global stock index fund today, you get 60% US stocks. You won't see a foreign name in the top 10 anymore. Toyota (TM) — Japan's biggest company by market value and the world's number one car company by earnings — is just 0.28% of the fund. You'll get almost 5x as much Tesla (TSLA) investing in the fund.

To Tesla stock fans, this matters as much as noting Nokia was once the top cell phone company and Apple was overpriced at the dawn of the iPhone. I'd reply to that by noting that Apple wasn't worth over a trillion dollars at the dawn of the iPhone as Tesla is today; it was worth $100 billion.

The future now costs 10x as much.

Back before this long run of foreign stock underperformance, half the global top 10 was foreign, mostly companies in China. In 1999, before the big run in foreign stocks, it was 80% US stocks.

US GDP is just 25% of global GDP. This doesn't mean the US should be at 25% of global market cap for many reasons; notably, more of our economy is publicly traded, and the tech monopolies are located here. But as recently as 2007, after a few years of foreign stocks outperforming the US (much because our dollar sank in value), our stocks were down to around 30% of global market cap. We are double that now.

We are at, or near, the high of our stock market valuation relative to foreign markets.

Historically, US vs foreign stocks go through periods of performance gaps, much of it currency related, and as a sort of reversion to the mean we're probably due for a few years of underperformance relative to foreign stocks. But then, we were due for this at the beginning of this year and yet… here we are with another year of US dominance of global stock markets. Note that we can get back to normal levels by just falling more than foreign stocks in the next bear market.

It is hard to escape the feeling we are in a new grand bubble that has lifted most assets, including essentially all US stocks, bonds, and real estate. Unlike in past slides, there may be no safe resting place for (the money of) the wicked.

To get an idea how bad things could get, imagine if we returned to the valuations of the bottom of the 2007—09 crash, perhaps the last time stocks were cheap since the early 1990s.

To use the so-called Buffett Indicator, which is the ratio of total stock market value to our GDP, we got down to 50% of stock market value to GDP in early 2009 (from a then bubble high of around 150% in early 2000).

Today, stocks are worth $53 trillion, and our current GDP probably hit around $24 trillion by the end of 2021 (largely "thanks" to inflation), or 220% of GDP. If we had a crash back to 50% of GDP or $12 trillion it would be a — gulp — roughly 80% fall.

There are many things different today that could "stop" such a calamity; notably, low rates and a central bank willing to create money and buy assets well before we get to such levels. Frankly, we don't do Great Depressions anymore — the government steps in to make the bets whole again.

One unfortunate side effect is everybody who's anybody knows the support is there and is willing to pay a higher price for assets because the downside seems limited. All this does is create the need for greater support the next time around. It is unclear what will fix housing the next time it crashes — 0% mortgages?

Perhaps the end game is inflation, currently running near double-digit levels in the longest period of "transitory" in history.

Inflation can support inflated asset prices by inflating the fundamentals: rents, earnings, etc. Even the non-inflation-adjusted GDP can inflate, as it has this year. Inflation will also do wonders for our deeply indebted government now committed to running deficits in good times and bad, assuming rates stay below inflation, and why wouldn't they if the Fed creates money to buy bonds and push yields down?

The trouble with this inflationary soft landing is it requires — to quote now infamous 1920s economist Irving Fisher — a permanently high plateau in stocks. We have to freeze prices here and let the fundamentals inflate. But that won't happen. We'll turn 10% inflation into a reason to pay 30% more for homes and stocks as the only game in town to protect you from the inflation.

Our American exceptionalism is hiding questionable longer-term fundamentals. We're in an asset bubble where everything collectible has unlimited upside and little downside. We can't get the economy growing faster than other slow-growth economies globally without permanent fiscal and monetary stimulus. We could never balance the budget without causing a depression, much less reduce the trillions the central bank created to support the economy by removing money from the system without causing deflation and asset price collapse.

There is always the chance we get another near 30% year because bubbles can always get bigger. It is possible we inflate our way out of this one at great long-term cost to safety-seeking investors in cash and lower risk bonds. This risk is the main reason we're not 80% cash and bonds now. We can't safely earn 5% in a 3% inflation world; we can only safely earn 1% in a 7% inflation world.

There are already signs this grand bubble era is ending. Trendy stocks trading on stories without earnings are already crashing — most are now in a bear market. Formerly hot funds like ARK Innovation ETF (ARKK) were down 23% last year, while the rest of the stock market went to the moon.

The real question for 2022 is whether this bear market in hype eventually drags the whole economy and market down, sort of like the dot com crash of 2000. Can the economy handle losing trillions in paper value in digital collectibles?

Or has the stock market become a metaverse, and it no longer matters what assets were valued at in the real world of the past?

Stock Funds1mo %
Vanguard Utilities (VPU)9.42%
VanEck Vectors Pharma. (PPH)7.74%
Vanguard Value Index (VTV)6.94%
Homestead Value Fund (HOVLX)5.38%
Vanguard FTSE Europe (VGK)5.17%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)4.80%
Franklin FTSE South Korea (FLKR)4.67%
[Benchmark] Vanguard 500 Index (VFINX)4.48%
Vanguard FTSE Developed Mkts. (VEA)4.29%
Franklin FTSE Brazil (FLBR)3.93%
Franklin FTSE Germany (FLGR)2.84%
Franklin FTSE Japan ETF (FLJP)2.14%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)1.74%
Invesco CurrencyShares Euro (FXE)0.25%
Franklin FTSE China (FLCH)-2.48%
ProShares Decline of Retail (EMTY)-2.68%
ProShares UltraShort QQQ (QID)-3.69%
Bond Funds1mo %
iShares JP Morgan Em. Bond (LEMB)0.57%
Vanguard Mortgage-Backed Securities (VMBS)-0.18%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.41%
Vanguard Long-Term Bond Index ETF (BLV)-1.08%
Vanguard Extended Duration Treasury (EDV)-2.71%

November 2021 Performance Review

December 4, 2021

The market is too hot, so we cut back on stocks in late November until things cool off a little. This exuberance has mostly been in US growth stocks lately as global stocks, notably emerging markets, have been weak. We lost money last month relative to the US market, which we don't normally do in a down market, as did Vanguard's global balanced fund. The S&P 500, largely weighed to big-cap growth stocks, barely declined at all. If early December is any indication, beating the S&P 500 in December will be easier.

Our Conservative portfolio declined 1.74%, and our Aggressive portfolio declined 2.43%. Benchmark Vanguard funds for November 2021 were as follows: Vanguard 500 Index Fund (VFINX), down 0.70%; Vanguard Total Bond Index (VBMFX), up 0.33%; Vanguard Developed Mkts Index (VTMGX), down 4.72%; Vanguard Emerging Mkts Index (VEIEX), down 3.22%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 2.02%.

There was no stock fund category that beat the S&P 500 last month, which is almost impossible, especially in a down market. Somehow the mix of stocks in the popular index was the only way to not lose more than about 1% last month.

On November 26, we decreased our official stock allocation from 67% to 62% in our Aggressive Portfolio and 45% to 42% in our Conservative Portfolio.

Given the current world of low rates and high inflation, it may seem like a very stupid time to cut back on stocks and buy more bonds. It seems especially stupid to cut back on inflation-adjusted bonds in favor of bonds that will almost definitely lose to inflation this year.

While we certainly could be early (it won't be the first time) and miss more gains in stocks, when something seems like the clear way to go, it often is not. It was just last year that we added energy fund Vanguard Energy (VDE) and inflation-oriented bonds when everybody thought the oil business was done and oil futures were even near zero at one point of the negativity. When we bought Vanguard S/T Infl. Protect. (VTIP), our bond fund that owns TIPS or Treasury Inflation-Protected Securities, inflation expectations were for under 1% a year over the next five years.

The dumbest thing we did in hindsight was not buy more risky stocks - because that seemed dumb during a global economic shutdown.

Now that we made almost 10% in these safe bonds while non-inflation-adjusted government bonds went down a few percent and inflation expectations now are for 3%-ish a year, it is time to switch back to regular non-inflation-adjusted bonds. The more likely situation is the Fed tries to clip inflation and sends it down, along with stocks. Investors have been flocking to TIPS funds, which is another bad sign. If you want inflation protection beyond what your house, social security checks, and likely stocks offer, consider buying Series I Savings Bonds direct from the Treasury as they have a better risk-reward now because you won't "lose" 10% if inflation expectations go back down as can happen here.

We moved out of energy and small-cap stocks as the gains have been strong and the risk of downside too great. We sold all the inflation-adjusted bonds in favor of low-risk and low-return government mortgages in a new holding, Vanguard Mortgage-Backed Securities (VMBS), which barely yields over 1% but is a nice place to sit out the next down stock market, which could take inflation-adjusted bond funds down 5%-10%. We'll get some inflation protection, if this is even needed, from utilities stocks through Vanguard Utilities (VPU), which we increased.

Our new allocation to Japan through Franklin FTSE Japan ETF (FLJP) is more to own a safer stock market that has some relative value now compared to hotter markets, as well as potential currency-positive action. There will be a time soon when we will double down on China, which has been weak of late, but we don't want to be too early.

You can view a table detailing changes to the Aggressive portfolio by clicking here.

Changes to the Conservative Portfolio can be seen here.

We also rebalanced where appropriate to get closer to the official allocation percentages.

Stock Funds1mo %
[Benchmark] Vanguard 500 Index (VFINX)-0.70%
Franklin FTSE Brazil (FLBR)-1.52%
Vanguard Utilities (VPU)-1.59%
Invesco CurrencyShares Euro (FXE)-1.99%
Homestead Value Fund (HOVLX)-2.70%
Vanguard Value Index (VTV)-3.04%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-3.22%
ProShares UltraShort QQQ (QID)-4.58%
Vanguard FTSE Developed Mkts. (VEA)-4.64%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-4.72%
Vanguard FTSE Europe (VGK)-4.89%
VanEck Vectors Pharma. (PPH)-4.95%
ProShares Decline of Retail (EMTY)-5.16%
Franklin FTSE South Korea (FLKR)-5.17%
Franklin FTSE China (FLCH)-5.49%
Franklin FTSE Germany (FLGR)-6.45%
Bond Funds1mo %
Vanguard Extended Duration Treasury (EDV)3.60%
Vanguard Long-Term Bond Index ETF (BLV)1.10%
[Benchmark] Vanguard Total Bond Index (VBMFX)0.33%
iShares JP Morgan Em. Bond (LEMB)-3.20%

October 2021 Performance Review

November 7, 2021

The brief weakness in stocks in September didn't last. Any fears of inflation, stagflation, global supply shortages, and the like melted away as the S&P 500, with dividends, returned 7%, leading to a 5.13% three-month return and a whopping 24% year-to-date.

This 7% pop was higher than the monthly return of 95%+ of fund categories (stock and bond). It was also enough to get us to Dow 36,000, only 22 years after the then-famous bubble book of the same name was published in 1999. For the record, it took about 15 years for investors to break even on NASDAQ stocks purchased in early 2000 and about a decade for S&P 500 investors to be safely above the levels of the bubble top (the brief move above 2000 levels in the S&P 500 didn't hold through the 2007-09 crash).

Our Conservative portfolio gained 3.19%, and our Aggressive portfolio gained 3.16%. Benchmark Vanguard funds for October 2021 were as follows: Vanguard 500 Index Fund (VFINX), up 7.00%; Vanguard Total Bond Index (VBMFX), down 0.03%; Vanguard Developed Mkts Index (VTMGX), up 3.15%; Vanguard Emerging Mkts Index (VEIEX), up 1.11%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 3.33%.

Our low allocation to US growth stocks was covered by strong returns in energy, utilities, and bonds, leading us to roughly match the Vanguard global balanced fund, which is a bit riskier (more stocks and downside) than our portfolios. It was another late 1990s market, where everything sort of underperforms large-cap growth stocks in the US.

Our hottest fund was Vanguard Energy (VDE), up 11.21%, as inflation fears and consumer demand drive oil ever higher. It is almost unbelievable to consider that a little over a year ago we had zero-dollar oil futures and everyone writing oil off as yesterday's investment destined to go the way of the buggy whip, and ultimately the internal combustion engine.

Now there are gas lines in the UK and Russia is sitting in the natural resource catbird seat. While the good times could last, this area needs to get cut back from portfolios, if for nothing else, as protection from the next economic slowdown, which will break the oil markets again. Vanguard Utilities (VPU) was up 6.01% as interest rates drifted back down, boosting the value of this high dividend income area. Everything else we owned underperformed the S&P 500, though only Brazil stood out as a big loser (not including shorting), with Franklin FTSE Brazil (FLBR) down a big 9.17% as emerging markets in general are falling out of favor, kicked off by China's ongoing troubles.

This fear of foreign emerging market risk pushed iShares JP Morgan Em. Bond (LEMB) down 1.18% during an otherwise good month for bonds that saw our Vanguard Extended Duration Treasury (EDV) holding climb 3.52% and Vanguard Long-Term Bond Index ETF (BLV) up 1.72%.

Other hot areas in October were precious metals funds, which jumped almost 10% in an otherwise terrible year where they are still down for the year - surprising to those who believe that gold is the ultimate protection against inflation.

It must be aggravating to gold bugs to finally (after waiting for so many years!) get inflation to jump significantly only to watch in horror as gold- and silver-related investments slide. To add insult to injury, the new anti-dollar investment all the youngsters can't stop blathering about - cryptocurrencies - are up big. We've read stories about the supposedly uncomfortable holiday season as families with, let's say, differing COVID policies get together, but what of breaking bread while sitting on a pile of 'precious' metal coins bought from some TV ad about Armageddon only to hear some younger family members talking about their digital currency riches?

Understandably, with interest rates below inflation, the incentive to do something is high. Low, sub-3% rates will likely be here forever, other than some brief pops, for two main reasons: too much money to invest in too few safe assets, and globally indebted governments like ours literally can't afford the payments on the debt if the rates rise to 'normal' levels.

The Fed is going to orchestrate a system to keep the economy and government functioning and that is likely going to require managing how much cash and bond investors can lose relative to inflation. Don't hate the Fed, though - they are merely picking up after our government, which won't or can't close the gap between spending and tax revenues. It is almost preposterous that the Fed may have to raise rates soon, probably crushing stocks and real estate, all to fight inflation that the government can clamp down on by raising taxes and/or cutting spending. Sadly, the fiscal response would only help our debt situation while the Fed's fix of raising rates will only worsen it by raising the government's borrowing costs.

But while low rates can and should rationalize higher asset prices, they won't prevent downside risk as panic takes over or guarantee higher returns going forward.

The main difference between now and the early 2000s Dow 36,000 book era isn't stock valuations, which are almost equally absurd as they were in 2000 (and in many cases more so). It is the lack of a safe 5% choice.

Imagine stocks double from here in the coming few years, and we get a dividend yield of below 1% across the market (currently only 1.3%, roughly where we were in 2000) and P/E ratios go to 44 from around 22 now. Or double again and get to basically Japan 1989 valuation levels. At some point, you won't beat even the negative inflation adjusted returns of safer bonds or cash over time. The same is true of real estate - there is a point, say when the rental yield doesn't even cover property taxes and maintenance, that upside is more or less limited. There is a reason Warren Buffett currently is sitting on a record $150 billion in cash..

The Japan stock market is still about 25% under the highs of over 30 years ago. When you get into bubble territory, the only way to not lose money in the longer run is if the underlying fundamentals - earnings with stocks, rents with real estate - grow and catch up to your overvaluation. Unlike Japan, we've remained a positive GDP growth country (but only in the sub-3% range annualized since the 2000 bubble) and tech earnings have caught up to the old NASDAQ price level, eventually.

The question is, can we grow the fundamentals fast enough again when we are already running massive budget deficits with little room to add more, under-tax and overspend as if in a recession, are hitting inflation levels the Fed will eventually crush, and are probably going to face rising taxes in the future? We've got other population issues that will be an increasing drag, as they have been in Europe and Japan.

For those looking too hard for investments to get away from zero, please check out "Series I Savings Bonds" directly from the U.S. Treasury's 1990s retro website. They are sold with zero yield with an inflation adjustment, so if inflation is 5% you get a 5% return in the form of the bond's value going up - a gain that can be deferred for 30 years.

These directly sold non-market-traded bonds can be superior to the inflation-adjusted bonds we already own in our portfolios and client accounts (and are now selling), which already adjusted up in value as investors' fear of future inflation grows (leaving room for a drop if we get falling inflation fears). Direct I bonds don't sell at a premium (other than a no-coupon besides an inflation adjustment - itself a sign of high demand). You will still need inflation to be higher than, say, 2% to beat regular non-inflation bonds, so while they may have no downside they can underperform other low-return investments. What you don't risk is "losing" 5% to 10% if inflation comes down fast, as can be the case in TIPS if you buy now and sell when investors aren't as fearful about future inflation.

The direct-bought bonds are limited to $10k per person per year or larger investors would be snapping them all up. It is a gift in this market. Yes, they can be sold when there are better deals in other safe assets (which may be never) or stocks (likely). The current interest rate is 7.12%, but it will drop when the government gets around to stamping out inflation, or if inflation just proves to be transitory as we are told. All those gold investors who are down for the year during our highest inflation year in decades shouldn't be jealous of cryptocurrencies, but zero-risk, zero-fee, or zero-commission inflation-adjusting bonds that guarantee to pay you the rate of inflation. They don't advertise them on TV, of course.

It is also worth noting that stock markets tend to go down soon after a rise in inflation, not so much because rising prices destroy economies at relatively low levels of inflation, but because the actions taken to fight inflation sink asset prices. This is why the transitory theory better prove right - if inflation goes away "naturally," with no major Fed action, we are far more likely to avoid another market slide.

Stock Funds1mo %
Vanguard Energy (VDE)11.21%
[Benchmark] Vanguard 500 Index (VFINX)7.00%
Vanguard Utilities (VPU)6.01%
Homestead Value Fund (HOVLX)5.82%
Vanguard Value Index (VTV)5.44%
Vanguard FTSE Europe (VGK)5.03%
Vanguard Small-Cap Value (VBR)4.56%
VanEck Vectors Pharma. (PPH)3.69%
Vanguard FTSE Developed Mkts. (VEA)3.23%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)3.15%
Franklin FTSE Germany (FLGR)3.12%
Franklin FTSE China (FLCH)2.43%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)1.11%
Invesco CurrencyShares Euro (FXE)-0.31%
Franklin FTSE South Korea (FLKR)-1.52%
ProShares Decline of Retail (EMTY)-5.65%
Franklin FTSE Brazil (FLBR)-9.17%
ProShares UltraShort QQQ (QID)-14.69%
Bond Funds1mo %
Vanguard Extended Duration Treasury (EDV)3.52%
Vanguard Long-Term Bond Index ETF (BLV)1.72%
Vanguard S/T Infl. Protect. (VTIP)0.70%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.03%
iShares JP Morgan Em. Bond (LEMB)-1.18%

September 2021 Performance Review

October 5, 2021

High inflation with rising energy prices was unsettling enough, but add interest rates on a move back up and it all seemed to be too much for investors to handle. In September almost all fund categories were down, except energy, commodities, and Japan.

Our Conservative portfolio declined 2.36% and our Aggressive portfolio declined 2.27%. Benchmark Vanguard fund results for September 2021 were as follows: Vanguard 500 Index Fund (VFINX), down 4.65%; Vanguard Total Bond Index (VBMFX), down 0.91%; Vanguard Developed Mkts Index (VTMGX), down 3.43%; Vanguard Emerging Mkts Index (VEIEX), down 3.37%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, down 2.96%.

Our own energy holding Vanguard Energy (VDE) was up 8.66%, which with a boost from our shorts helped us to achieve a fair relative performance. However, a big hit to Franklin FTSE Brazil (FLBR), down 11.47%, and a surprising drop of 6.95% in Vanguard Utilities (VPU) kept us on the ropes with the market, though not quite as bad as Vanguard's global balanced portfolio fund.

The drop in stocks last month was a little more oriented towards large caps, possibly because in recent weeks we saw the first real outflows from stock funds since early this year, and ETFs and other funds tend to be capitalization-weighted.

With a slightly rising U.S. dollar and weakness in many emerging markets, there was no help from foreign markets, except for Japan. The Chinese government's continued crackdown on tech companies has been dragging on Chinese stocks and the negativity may be spreading to other markets. The added worry is what appears to be a collapse of one of China's largest real estate companies, Evergrande. Our own China fund Franklin FTSE China (FLCH) was down only about as much as the S&P 500 last month, but much of the damage has been done as China has been the worst performing major market of 2021.

Everybody seems to know that all assets are expensive now, but the cost of not being in the risk party is slow erosion of purchasing power, as 2021 is shaping up to be a negative 3%+ return on near 0% yield cash, after adjusting for our new high inflation. Worse still for safety seekers, it seems as if speculators borrow your safe money at low rates and gamble in the riskier markets, from stocks to real estate - even cryptocurrencies.

Investors seem to have one eye on when the music will stop - and that could come in the form of higher interest rates or a slowing economy. The wages of fear for an investor today is a gamble of how much inflation the Fed will allow before ruining the speculative party. Ideally, inflation drifts back down and the Fed can slowly get back to normal while the economy ceases to need the twin stimuli of deficit spending and money creation. But the continuing stories of supply shortages and disruptions make so soft a landing look increasingly unlikely.

There have been large monthly inflows into stock funds for the first time in years. This investor confidence started in February of 2021 and held up until mid-September. This return to stocks may have reflected confidence early this year that the vaccines would get the global economy back on track. Unfortunately, once things look safe for investors, prices tend to be too high.

For years now, money has been coming out of stock funds, though most of this was just rebalancing into bonds as stocks did well. The last solid stretch of stock inflows, such as we are seeing now, was in 2017. The only down year for U.S. stocks since the 2007-09 crash was 2018, and 2018 was an even worse year for foreign markets, which is where most of the new money was going back then.

When investors start adding money to stock funds month after month, lousy returns often follow. We could be seeing the end of the run-up in stocks now.

Stock Funds1mo %
ProShares UltraShort QQQ (QID)11.76%
Vanguard Energy (VDE)8.66%
ProShares Decline of Retail (EMTY)6.64%
Invesco CurrencyShares Euro (FXE)-2.01%
Vanguard Small-Cap Value (VBR)-2.55%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-3.37%
Vanguard FTSE Developed Mkts. (VEA)-3.39%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-3.43%
Vanguard Value Index (VTV)-3.94%
VanEck Vectors Pharma. (PPH)-4.23%
[Benchmark] Vanguard 500 Index (VFINX)-4.65%
Franklin FTSE China (FLCH)-4.78%
Homestead Value Fund (HOVLX)-5.38%
Vanguard FTSE Europe (VGK)-5.40%
Franklin FTSE Germany (FLGR)-5.63%
Franklin FTSE South Korea (FLKR)-6.83%
Vanguard Utilities (VPU)-6.95%
Franklin FTSE Brazil (FLBR)-11.47%
Bond Funds1mo %
Vanguard S/T Infl. Protect. (VTIP)-0.06%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.91%
Vanguard Long-Term Bond Index ETF (BLV)-2.52%
iShares JP Morgan Em. Bond (LEMB)-3.02%
Vanguard Extended Duration Treasury (EDV)-3.84%

August 2021 Performance Review

September 3, 2021

The S&P 500 beat 95% of fund categories last month, once again leaving portfolios in the dust as mega cap growth and tech stocks continued to dominate, much like they did in bubbly 1999. With no real standouts other than perhaps utilities, we barely beat bonds last month.

Our Conservative portfolio gained 0.37% , and our Aggressive portfolio gained 0.45%. Benchmark Vanguard funds for August 2021 were as follows: Vanguard 500 Index Fund (VFINX), up 3.04%; Vanguard Total Bond Index (VBMFX), down 0.20%; Vanguard Developed Mkts Index (VTMGX), up 1.38%; Vanguard Emerging Mkts Index (VEIEX), up 2.67%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 1.31%.
The only fund to beat the S&P 500 in our portfolios was Vanguard Utilities (VPU), up 3.7%. This was probably the result of relatively low valuations attracting investors, as well as yields being harder to come by, attracting interest.

Emerging markets have been rocky, with many markets negative in recent weeks and months. This is likely the fear of rising inflation in many of these markets as well as the overall reminder of political risk that appeared seemingly out of the blue in China. Franklin FTSE South Korea (FLKR) was down 2.33% with Franklin FTSE Brazil (FLBR) down 2.8%. Bonds were weak, and only our reduced stake in iShares JP Morgan Em. Bond (LEMB) was up, with a 0.53% return. Interestingly, inflation-adjusted bonds were flat, and precious metals funds were the worst-performing fund category during this era of the highest inflation in over a decade.

At the top of the market in 2000, before the collapse of US tech and growth stocks, tech stocks represented about 33% of the S&P 500. After the 2000—2002 crash—which also took the S&P 500 down by about half, and tech stocks down a whopping 80%—technology was down to just 14% of the index.

Today the tech sector is 27%. While this level seems lower than the past tech bubble, the index creators now count Google, Facebook, and Netflix as communications companies, like Verizon, and Tesla is a consumer discretionary name, like Ford. These high-flying growth stocks are priced as tech stocks, and their value is derived largely from software technology. All in, what could be considered technology shares are pushing half the value of the stock market.

The only reason this is not a completely absurd bubble about to crash 80% (as opposed to an overvalued sector that could fall 25—50%) is that these companies make much of the money in the economy. In 2000 it was a bubble about future earnings, sort of like how Tesla is today. The sector earned 15% of the earnings of the S&P, but was more than 30% of the market value— basically the P/Es were double. Today the tech sector trades at only about 1/3 premium value over the rest of the index. Considering the reliability of the earnings growth, this isn't even out of whack.

In general, being in the most successful and popular area in the market when the economy slides is a bad idea. Financials in 2006 were over 22% of the market—the then #1 position in the S&P 500—as the world was becoming one of finance engineering rather than manufacturing or even tech. After the crash and lackluster years, this sector is now just 11% of the market.

How will the end come for tech leaders? A case could be made that, in the future, most profitable companies will be essentially tech names driven largely by software, and there will be no more epic crashes as in 2000. More likely there will be some hiccups along the way. One path to slowdown is just running out of places to use software to earn high margin profits. More likely the concentration of power will be their undoing, if not from their own competition with each other, then from government intervention as we are now seeing in China.

The top five tech names in the US alone are now around 23% of the S&P 500's market value. Most of them deal in high-margin spaces with few competitors where the buyer has little choice. The price is more about maximizing profit than market share or competition.

The Government has largely ignored tech power because it mostly seems to impact other businesses, not consumers. But input costs don't magically go away. The consumer—or voter, rather—doesn't see the full bill, sort of like Value Added Tax or VAT in Europe. The consumers often just see exciting free or cheap services, or their own behaviors are being sold to the highest bidder.

Tech billionaires also seem to live relatively modestly, at least next to the so-called robber barons of over a century ago, which led to the era of busting monopolies and higher taxation. Sure they have jets and yachts, but you can't really compare the lifestyles of the rich and famous from the turn of the century globally to today. This may have shielded the socialist tendencies of global governments and the public.

These days of relatively low regulation and tax may be coming to a close. They seem to be in China, which also has a high-flying tech sector, unlike most of the world. Europe has little to lose and more to gain as this is barely their own industry getting cracked down on, sort of why adding tariffs to China was popular. Rising regulations and taxes could scare investors out of tech. There even seems to be growing bipartisan support here.

This could take years to play out, but the upside to downside risk from these levels seems skewed to the negative.

Stock Funds1mo %
Vanguard Utilities (VPU)3.70%
[Benchmark] Vanguard 500 Index (VFINX)3.04%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)2.67%
Homestead Value Fund (HOVLX)2.65%
Vanguard Value Index (VTV)2.09%
Vanguard Small-Cap Value (VBR)2.08%
Vanguard FTSE Europe (VGK)1.81%
VanEck Vectors Pharma. (PPH)1.58%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)1.38%
Franklin FTSE Germany (FLGR)1.33%
Vanguard FTSE Developed Mkts. (VEA)1.31%
Franklin FTSE China (FLCH)-0.21%
Invesco CurrencyShares Euro (FXE)-0.54%
Vanguard Energy (VDE)-1.85%
Franklin FTSE South Korea (FLKR)-2.33%
Franklin FTSE Brazil (FLBR)-2.80%
ProShares Decline of Retail (EMTY)-4.37%
ProShares UltraShort QQQ (QID)-8.23%
Bond Funds1mo %
iShares JP Morgan Em. Bond (LEMB)0.53%
Vanguard S/T Infl. Protect. (VTIP)0.00%
[Benchmark] Vanguard Total Bond Index (VBMFX)-0.20%
Vanguard Extended Duration Treasury (EDV)-0.28%
Vanguard Long-Term Bond Index ETF (BLV)-0.36%

July 2021 Performance Review

August 5, 2021

In July, the S&P 500 was in the top 5% of fund categories as market cap-weighted investing in US companies continued to dominate global investing after a brief pause in leadership. The few hot areas that did slightly better last month were yield oriented, as rates drifted lower again in the face of rising inflation and investors snapped up any yields over 2%. The big losers were some recent big winners abroad. A crackdown in China on tech power — and perhaps capitalism itself — hit emerging markets hard, with China down around 10%. Emerging market indexes were down over 6%.

Our Conservative portfolio gained 0.60%, and our Aggressive portfolio declined 1.41%. Benchmark Vanguard funds for July 2021 were as follows: Vanguard 500 Index Fund (VFINX), up 2.37%; Vanguard Total Bond Index (VBMFX), up 1.21%; Vanguard Developed Mkts Index (VTMGX), up 0.54%; Vanguard Emerging Mkts Index (VEIEX), down 6.29%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 0.51%.

Our recently increased exposure to some of the yield-focused areas like long-term bonds and utilities didn't make up for the big losses in emerging markets like China and Latin America, so our Aggressive portfolio, with more exposure to these riskier areas, was down. The other big drag was energy. We should have cut back on energy and shifted more to utilities, as discussed recently. China and Latin America warrant consideration for more buying on recent weakness.

Two things that became clear in recent weeks were 1) a slowing economy is more likely in future than ongoing inflation and rapid economic growth, and 2) tech power might finally be up against global regulations. This can hit market cap-weighted investments hard.

If the economy is going to be so hot and inflationary, interest rates are unlikely to head back down, much less take energy stocks down as well. A strong economy and rising prices are great for energy companies but terrible for longer-term bonds. Perhaps investors are wrong, but it is possible rising prices and our economic boom are merely the result of massive deficit spending globally. That party is about to end and/or rising Covid numbers are about to put a damper on global growth, but not enough of a damper to warrant more aggressive government Covid-related spending.

We've seen the economic limits of increasing demand and reducing supply: prices go up. Moreover, lately it seems consumers are in a semi-permanent hoarding mode. Call it the toilet paper effect. If prices of used cars start going up, it wouldn't take many to defer this purchase for prices to slide — yet they don't. Same with domestic air travel and tourism, which by many measures is a semi-nightmare right now, with trip costs and hassles rising. The consumer doesn't back down. Instead, they get jacked up, as if in a crazed bidding war on a home.

Consumers always felt that inflation was higher than government numbers when, in fact, the opposite was true. Yet it may be true now, if consumers want to buy more of the things that go up the most in price. Since the late 1990s, government statisticians have assumed consumers are rational and switch to cheaper alternatives — substituting oranges for apples if apples go up in price. Time to update your models.

But this frenzy has an end date, if not from consumers backing down at the cash register. It can end in a few ways. Eventually, supply will come back and excess government spending diminish. If prices keep going up, the Fed will tap the breaks and just a tap can cause a pile-up these days. The Federal government can decide it is time to pay for the spending with taxes, though this timing is the most debatable with election issues.

The other area of concern is tech power and government crackdowns. China recently decided tech power has crossed over to the abusive side, even briefly allowing a state-owned news outlet to call video games "opium of the mind." Hyperbole aside, this tech addiction doesn't have the clear health problems of actual drug addiction, but its damage to society is clear if we look at the rise in mass delusions, widespread gambling often in the disguise of investing, increased depression, obesity, and other manifestations. Perhaps it's more correlation not causation, but that won't stop regulators.

The China crackdown hit Chinese stocks and our own holding Franklin FTSE China (FLCH) hard, down 13.42%. We'll never know if this crackdown by China is legitimate concern for citizens or just worry tech power is encroaching on government power. It does highlight what a sizable percentage of market cap-weighted index is now tech companies that have until now largely been allowed to do as they please, as if they don't control many areas of your life.

China is raising interesting issues: How many hours a day should a child be allowed to play a video game, and should 10-year-olds be able to make in-app purchases? In the US, where the government doesn't get to say much about child rearing, this sort of regulation isn't in the pipeline. But how many hours of your time can one tech company control before the government can influence what big tech charges you or those trying to sell you a product that must go through these intermediaries.

As noted previously, the irony is the internet was supposed to be about disintermediation. Yet transactions that in the past were between consumer and company now have a tech overload in the middle of everything, tracking behaviors to sell to the highest bidder or asking for a cut of the transaction between you and another software company.

Stock Funds1mo %
Vanguard Utilities (VPU)3.92%
VanEck Vectors Pharma. (PPH)2.87%
[Benchmark] Vanguard 500 Index (VFINX)2.37%
Vanguard FTSE Europe (VGK)1.86%
Homestead Value Fund (HOVLX)1.26%
Vanguard Value Index (VTV)1.01%
ProShares Decline of Retail (EMTY)0.92%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)0.54%
Vanguard FTSE Developed Mkts. (VEA)0.50%
Invesco CurrencyShares Euro (FXE)-0.03%
Franklin FTSE Germany (FLGR)-0.19%
Vanguard Small-Cap Value (VBR)-1.65%
Franklin FTSE South Korea (FLKR)-5.01%
ProShares UltraShort QQQ (QID)-5.77%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)-6.29%
Franklin FTSE Brazil (FLBR)-8.07%
Vanguard Energy (VDE)-8.70%
Franklin FTSE China (FLCH)-13.42%
Bond Funds1mo %
Vanguard Extended Duration Treasury (EDV)4.95%
Vanguard Long-Term Bond Index ETF (BLV)2.98%
Vanguard S/T Infl. Protect. (VTIP)1.31%
[Benchmark] Vanguard Total Bond Index (VBMFX)1.21%
iShares JP Morgan Em. Bond (LEMB)-0.46%

June 2021 Performance Review

July 3, 2021

The great reversal of investment laggards from the past few years beating tech and growth stocks has come to a grinding halt in recent weeks. Larger-cap U.S. stocks and tech stocks were the top performers last month after lagging for much of the year. Value stocks were at the bottom of the heap. While the S&P 500 was up 2.33%, this disguised the big split. Large-cap growth and tech funds were up around 5—7%, while value funds were down slightly. Our focus on yesterday's losers and some shorts on tech dragged at our returns last month, though some hot areas, like energy and Brazil, kept us in the game with the drag of value stocks.

Our Conservative portfolio gained 0.67% , and our Aggressive portfolio gained 0.85%. Benchmark Vanguard funds for June 2021 were as follows: Vanguard 500 Index Fund (VFINX), up 2.33%; Vanguard Total Bond Index (VBMFX), up 0.77%; Vanguard Developed Mkts Index (VTMGX), down 1.11%; Vanguard Emerging Mkts Index (VEIEX), up 1.19%; and Vanguard Star Fund (VGSTX), a total global balanced portfolio, up 1.73%.

Specific hot areas in our portfolios last month included Franklin FTSE Brazil (FLBR), up 6.29%, perhaps Brazil may be appealing to contrarians (those who want to buy out-of-favor investments) looking to get in after years of rough returns and a still very much out of control Covid situation. Vanguard Energy (VDE) was up 5.19% and is one of the hottest funds of the year, as investors realize that not only were last year's hit to energy and predictions of a dying oil industry a little overblown, but the current inflationary rebound, fueled by twin monetary and fiscal stimuli in a not recessionary economy, as ill-fated as that may be, is a perfect environment for this down and out industry. That said, we're going to need to refocus to other areas, perhaps more utilities, to have additional downside protection.

Everything else we owned underperformed the S&P500, as did about 85% of mutual fund categories, notably Vanguard Value Index (VTV), which is down 1.25%, showing that the growth versus value fight had a clear winner last month, though, for 2021, value is still ahead. Inflation fears seem to be abating as gold-related funds were the worst performers last month (the only fund category to drop double-digits) and interest rates drifted further down, into the negatives adjusted for inflation.

This boosted our recently repurchased and very interest-rate sensitive Vanguard Extended Duration Treasury (EDV), which climbed 5.48%, followed by a 3.86% jump in Vanguard Long-Term Bond Index ETF (BLV). Interestingly, higher credit risk iShares JP Morgan Em. Bond (LEMB), which we had cut back on a bit recently after a big run-up, slid 1.13% as inflation fears are very much affecting emerging markets and weighing on currencies, since we are essentially exporting inflation as we create money here and buy stuff.

This inflation phenomenon is dangerous for many markets abroad, as they are still dealing with serious Covid issues and can't necessarily raise rates or tighten monetary policy to fight the inflation we are dumping on them without risks to their own economies. This situation could be a drag on foreign markets.

Such relative swings, particularly between growth and value, do raise the question, why bother? Just own the S&P 500 and you will get some average of the value and growth. First, note that, back in the overpriced value markets from 2006 on, we were heavy in larger-cap growth funds. Our problem back then, at least after the initial rebound in the market off the 2009 low, was generally having too little in stocks, but a focus away from small-cap, value, commodities, and foreign markets was a winner that we, unfortunately, didn't stick with long enough. These relative performance wins tend to go on way too long and you can't walk away too soon. The pendulum swings too far.

But now is not too soon; larger-cap tech and growth are near the end of an outperformance cycle. Even if we don't get ongoing outperformance of value and foreign stocks relative to U.S. growth and tech, the best case for growth is that it moves with everything else—and everything is basically overvalued and goes up or down mostly in reaction to rates, recessions, and wavering risk appetite.

One reason the indexing phenomena may finally be nearing a breaking point is that the whole concept works best as a free ride off all the active stock-picking going on, only without the fees and transaction costs. This has been a smart move for basically 50 years. The problem now is that as more and more buying as a percentage of the market is indexing (or passive), the rest of the "actives" are becoming relatively more important. Unfortunately, that is a world fast being overrun by morons less experienced investors trading more on narratives than numbers. So powerful are all the pocket day traders that expert, or sometimes just a little crooked, investors who short stocks are having to cut back on their questionable yet important work of repricing overhyped or even scam stocks.

If this keeps up, we're going to have a market of Robinhooders reading chat boards and index investors following along for the ride. This doesn't mean you have to avoid all indexes, just the ones with more popular momentum and so-called meme stocks.

The danger for the funds is less in the meme bubble of idiocy than in the question, how much does the real economy and market tank when the speculative mania collapses? The last two crashes were essentially the result of a collapse in speculation, tech stocks in 2000, real estate in 2007. You didn't have to be over-allocated to these areas to feel the pain. When two trillion in cryptocurrencies collapses 90% and so does perhaps another five trillion in blatant market overvaluation, on top of perhaps another one to five trillion in outright future bankruptcies, it's likely that at some point, you are going to feel that, even if you don't have a Robinhood account.

Stock Funds1mo %
Franklin FTSE Brazil (FLBR)6.29%
Vanguard Energy (VDE)5.19%
[Benchmark] Vanguard 500 Index (VFINX)2.33%
Franklin FTSE South Korea (FLKR)1.85%
VanEck Vectors Pharma. (PPH)1.26%
[Benchmark] Vanguard Emerging Mkts Stock Idx (VEIEX)1.19%
Franklin FTSE China (FLCH)0.57%
Vanguard FTSE Developed Mkts. (VEA)-0.94%
Vanguard Small-Cap Value (VBR)-1.02%
[Benchmark] Vanguard Tax-Managed Intl Adm (VTMGX)-1.11%
Vanguard Value Index (VTV)-1.25%
Homestead Value Fund (HOVLX)-1.34%
Vanguard FTSE Europe (VGK)-1.39%
Vanguard Utilities (VPU)-1.85%
Invesco CurrencyShares Euro (FXE)-2.84%
Franklin FTSE Germany (FLGR)-3.35%
ProShares Decline of Retail (EMTY)-3.41%
ProShares UltraShort QQQ (QID)-12.02%
Bond Funds1mo %
Vanguard Extended Duration Treasury (EDV)5.48%
Vanguard Long-Term Bond Index ETF (BLV)3.86%
[Benchmark] Vanguard Total Bond Index (VBMFX)0.77%
Vanguard S/T Infl. Protect. (VTIP)0.04%
iShares JP Morgan Em. Bond (LEMB)-1.13%