Rule #3 – Never Lose Big
Monthly Outlook: June 2019 A lot of experience and research supports our thesis that you can invest better than average if you’ll follow our three simple rules: Rule #1, costs matter so keep them low so more of the return flows through to you. Rule #2, stock picking to out-perform the market is really hard so focus, instead, on actively managing your allocation. And Rule #3, the most important of all, is Never Lose Big! Our iFolios strategy was carefully designed with these 3 Rules in mind. And today, with many markets tipping over to new downtrends, is the perfect time to review how we manage portfolios to try and never lose big. Before we do, let’s review the markets. May proved to be a tough month for investors. The S&P500 lost 6.5% in May, giving back the 6.5% gain it had achieved from February through April. [...]
Everything is Awesome?
Monthly Outlook: May 2019 You hear it everywhere – “Everything is Awesome!” GDP is up over 3%, earnings are up, employment is up. Stocks, bonds, gold, dollar, home prices – all up! Awesome! It’s a chicken in every pot! What could go wrong? We’ll get to that. But first, let’s review April. U.S. stocks continued their 2019 rally with the Russell 3000 gaining another 3.9%. The strongest sectors are Technology and Utilities, an odd combination. Weakness is seen in Energy, Financials, and Healthcare. International stocks gained 2.7% with Europe and Emerging Markets doing better than Asia. Bonds marked time in April with flat results, down 0.1% for the month. Blending the markets for common allocations, the iFolios 75 benchmark was up 2.3% and the iFolios 85 benchmark was up 2.7%. We matched or slightly beat the benchmarks in May. So yeah, everything does seem awesome! We should also point out here [...]
Invest like a Boy Scout – Be Prepared
Monthly Outlook: April 2019 March was another decent month as U.S. stocks added 1.8% and international stocks gained about 1.0%. Bonds were the unlikely star of the month, adding 1.9%, after the U.S. Fed signaled that they were likely done raising rates after their meeting on March 20th. Putting it together, the balanced iFolios 75 benchmark rose 1.2% and we beat that slightly. The focus should really be on longer term trends, not just month-to-date. From March 2016 to October 2018, stock markets rose steadily. The S&P500 rose from 2,025 to 2,750 over that 3½-year period, a nice gain of 35%. Then the yo-yo started. In mid-October 2018, the S&P500 dipped below 2,750, its 200-day m.a. trendline, for the first time in nearly four years. That’s when we sold for protection. Stocks dropped a stunning 15% for two months, crushing the Christmas spirit. Then, as suddenly as they dropped, [...]
Yo-Yo Complete. Now What?
Monthly Outlook: March 2019 Last month we discussed the stock market “yo-yo,” a dramatic 4-month dip & rebound of about 15%. In February, stocks extended the rebound a bit more with another 2% gain to complete the full yo-yo cycle. The S&P500 is now back to where it was four months ago, but after a wild ride. In fact, the S&P500 is where it was a year ago, about 2,800. The market has gone nowhere in a year! I kid you not, look it up. That’s more than a little frustrating to investors who expect to make money every year. Looking back at 90 years of stock market history, we know that only 7 years were flat (+/-2%). And never was a flat year followed by another flat year. So, we have to ask, “Now what?” History also tells us that stocks have been up 73% of the years and [...]
Stocks Yo-Yo: Trend Still Down
Monthly Outlook: February 2019 Wow, what a great month for stocks! Markets yo-yoed in December and January. You may remember 2018 ended on an unhappy note with stocks dropping sharply in December. U.S. stocks (S&P500) dropped 8.8% in December. But then they snapped back 7.9% in January! The same yo-yo pattern occurred in international stocks with the EAFE Index dropping 5.3% in December and snapping back 6.6% in January. The news will highlight the recent strength but really stock markets are only back to where they were two months ago at best. As always, we use our long-term trend indicator (using the 200-day moving average) to determine the overall trend of each market. And unfortunately, nearly every stock market remains in a down-trend for now. Sorry to be the bearer of that news. Of course, the bounce in January puts most stock markets closer to their declining trend line, but [...]
2019 Forecast: Made for iFolios!
Monthly Outlook: January 2019 Happy New Year! 2018 was not a particularly good year for global stock markets so we’re happy to be moving forward. International stocks started a new downtrend in May/June due to trade concerns and Brexit and then it rolled over to U.S. stock markets around mid-October. The Grinch came to steal Christmas in December with the S&P500 falling 10% and international stocks losing 5%. It was a weak ending to an already softening year. The good news – that we’ll discuss below – is we’ve been selling stocks for the past six months and are avoiding the bulk of these losses. First, let’s review 2018 market returns. U.S. stock markets lost 6.1% in 2018, but were flat right up to December 13th. International stock markets fell 14.2% in 2018 and were more steadily down from start to finish. Looking for slightly better news we turn to [...]