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Three Investment Lessons from a Baseball Legend

 

baseballguy
Growing up I was a baseball fan for as long as I can remember.  The Reds and the Mets were my early favorites but once my parents set down roots in the midwest I became the Cardinals fan I remain today.

Despite team favorites, there was one baseball player that all fans liked and his name was Tony Gwynn.

Tony Gwynn was one of the best pure hitters of all-time. He won the batting title 8 times and a .338 lifetime batting average (for those non-baseball fans, it was the highest career average for any player who started after WWII). 

And when Tony Gwynn was eligible for the Baseball Hall of Fame – he got in on the first ballot (not that there was any question he would get in on the first try).

This past weekend, Tony Gwynn passed away at the age of 54 from salivary gland cancer and the baseball world is mourning.

So what does a baseball legend have to do with successful investing?

LESSON #1: PROLIFIC AND CONSISTENT SMALL HITS

For Tony Gwynn, it was about getting base hits. He didn’t try to hit a home run – he would just beat you with singles and virtually never strike out. Sure, the home run hitters get all the glory, but Tony didn’t care about the glory, he beat you with the singles. And it was those thousands of nice and easy base hits that added up to a hall of fame career.

Investing Takeaway:  When it comes to investing, what makes a long term winning track record is not the occasional 10 bagger that you are lucky to find yourself owning.  Rather, it is the small but consistent wins that compound over time…the dividends collected, option premium earned, the costs saved, and the consistent profits that can be earned from trading a system that provides positive mathematical expectancy.

Show me an investor who has blown up his portfolio and I can guarantee you that it was because he or she was swinging for the fences…always trying to hit the ball over the fence and paying little attention to managing risks or capital control.  As in baseball, small consistent wins can keep you in the investment game for a lifetime.

LESSON #2: LONGEVITY

Tony played for twenty years. By knowing what he was good at and focusing on that one thing (base hits), he played professional baseball for two decades. He knew by just getting hits, it will help his team win and he wouldn’t be the “flavor of the month”. The final result was 3,141 hits over twenty years.

Investing Takeaway:  Successful investors find what they are good at and once they do, they stick with it.  A successful investment approach is one that meshes with an investor’s personality and goals.  For some investors, it might be the intensity of day trading and the idea of going home flat every night that works.  For others, it might be growing a portfolio of dividend achievers and letting compounding do its magic over time.  Regardless of where you fit within the spectrum, the key is to find an approach that fits and to stay with it.

Ideally, I want an approach that can capture most of the upside while protecting me from most of the downside.

For me, systematic, rules-based investing is the approach that I am most comfortable with.  It keeps my emotions in check, it provides discipline, it manages downside risk, and it automatically adapts to the ever changing markets.   I don’t have to worry about guessing what the markets are going to do next.  I know that my models will adapt and that’s all I need to know.

Investors who are constantly chasing systems and investment fads typically make no progress and are often near dead broke.  There is no Holy Grail and no Get Rich Quick Scheme…give it up before its too late if you find yourself getting caught up in this.

LESSON #3: LOYALTY

In a era where professional athletes hop from team to team for a bigger paycheck, Tony Gwynn was loyal. He played his entire career for ONE team, the San Diego Padres. The relationship he had with San Diego fans led to the team literally building a statue of Tony at the ballpark!

Investing Takeaway:  Once you have found the approach that works for you, follow it day in and day out.  Yes, I know that can be boring.  Within all us is the desire for excitement and for change….but when it comes to investing, the more times we can repeat a process that has positive mathematical expectancy, the more likely we will be successful.  Don’t believe me?   Think about a casino.  They know and they have built their lavish buildings on players staying at the table, hand after hand, roll of the dice after another.  The problem here though is they have the edge and you don’t.   In investing, it is easy enough to find an approach (Portfolio Cafe, cough, cough) that gives YOU the edge.  You simply have to be willing to stick to the discipline of following a system.  Find what works and become loyal to the process.

They broke the mold when they made Tony Gwynn, both the baseball player and the man. And there are many lessons to be learned by looking back and reflecting on his life.

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Are Stocks Falling From Grace Despite the Record High Stock Market Averages

Over the past several months our ETF models have made shifts away from high beta to dividend paying stocks, REITS and bonds.  In fact some models such as Sleep Easy have been holding a bond position for several consecutive months.  To a casual observer this may come as a surprise since what gets reported on the evening news is the record high stock market averages.

But behind the headlines, some interesting trends have developed.   The following is a list of the major asset-classes I track on a monthly basis.  They have been ranked on the basis of their combined  3-month and 6-month trailing returns.   I will let the diagram do most of the talking.

asset classes

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New Global Tactical Model Series added…

For the convenience of those interested in tracking Mebane Faber’s popular Global Tactical Asset-Allocation model that he originally featured in his 2006 paper, I have added that model among our tactical ETF models. As I discussed in a Seeking Alpha article, I have replaced the original 10 period moving average with the 8 period…it just seems to work better. Overall though, readers will find this tracks pretty close to what Meb has on his own site.

As some of you are probably aware, Meb has published some updates to his original paper, the most recent being February 2013.  In the latest update, Meb introduced 8 additional asset-classes for a total of 13.   He also discussed several alternative methods of allocating funds, one which included the discussion of combining a momentum-based ranking system along with the original use of the trend following moving average.  (Links to both the original and the updated paper can be found on the Reference page.)

This inspired me to conduct some research of my own given the tremendous success I have had with applying momentum across a variety of asset-classes.  After testing many combinations of factors, the finished model ranks the 13 ETFs using a ranking system that combines both momentum and volatility.  Any ETF that is not above the 8 period moving average is eliminated.  Finally, instead of selecting  the top five ETFs as Meb does in his paper, I settled on buying the top three in equal weight as the best choice. Below in the table are my test results.

Number of ETFsCAGRSharpe RatioMaximum DrawdownTotal Return (dividends reinvested)
115.8%.72-21.6189.6%
216.3%.85-13.2198.1%
316.8%.92-13.5207.4%
413.4%.77-16.7148.4%
512.3%.74-19.7131.7%

To summarize, less than three and the portfolio volatility reached unacceptable levels and more than three, the portfolio returns quickly diminish.   Thus, I have aptly named the new model, GTAA – Focus Three.

For some who may think that owning just three ETFs each month is too limited, remember that each ETF is in itself extremely diverse.  For example, the iShares Russell 1000 Growth ETF, a current model holding, is diversified with 625 separate securities.

I personally really like the stability of this model and how well it navigated the the 2007-2009 period.   Unlike some of my other models, this model does not include an inverse fund but never the less, the inclusion of fixed-income ETFs provided enough opportunity to keep downside risk contained to acceptable levels.

For individual investors looking for a single model that covers most all of the major asset-classes, I believe this could be a good choice.  And for financial advisors who want a simple but effective way to managed their client book, I would have to think this model could serve them well and provide the ability to build a very scaleable practice.

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Monthly Asset-Class Scoreboard – The Defensive Team has Stepped onto the Field

scoreboardIt has been awhile since I last updated the asset-class scoreboard.  For most of 2013 the top spots were occupied by large-cap growth, Nasdaq 100, and small-cap stocks.  How quickly things can change.   Since the January 15 price high at 1850.84 the S&P 500 fell 4.32% to a low of 1770.45 on January 29th.  What’s interesting about that is by declining past January 27th, the correction exceeded the duration of every correction since June of last year.  Of course the price has further declined into February making it now the longest correction since October/November 2012.

As a result of this, the three top ranked asset-classes at month end were all fixed-income related – investment grade corporate bonds, high yield bonds, and preferred stocks.   Whether this is just a breather being taken by the offensive team remains to be seen.  For now, the market is signaling that the best offense might be having a good defense.  In fact, some of Portfolio Cafe’s systematic ETF models have begun to work in defensive bond positions in classic “risk off” fashion.

Precious metals, despite recent signs of potential bottoming, remain entrenched at the bottom of the ranking, a spot occupied for eight months in 2013.  Emerging Markets continue their descent in rankings, roiled by rising credit fears and currency devaluations.

asset ranking 0131

 

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Passive Indexing – What Dirty Harry and Investing Have in Common

dirty harryI know what you’re thinking, punk. You’re thinking “did he fire six shots or only five?” Now to tell you the truth I forgot myself in all this excitement. But being this is a .44 Magnum, the most powerful handgun in the world and will blow you head clean off, you’ve gotta ask yourself a question: “Do I feel lucky?” Well, do ya, punk?

Harry Callahan, The Motion Picture “Dirty Harry”

Active vs. Passive – the age old debate that misses the real issues.

One of the most common and often heated arguments among investors is on the discussion of active versus passive investing.  The passive investors will argue that, since most active managers do not consistently beat their benchmark, that investors should simply buy index funds  and call it good.  The passive crowd includes some heavyweight names like Bogle, Ellis, and Burton and fund families such as Vanguard and Dimensional Fund Advisors.

Passive indexers believe that the markets are efficient and that the goal of every investor should be to capture the markets returns at the lowest possible costs.  I will concede that (a) most managers do not consistently beat their benchmark and (b) markets are generally efficient. But does this mean I think investors should follow the passive approach?  No, No, 1,000 times No!

I have long believed and discussed within this blog that the whole argument of passive versus active misses the point and is just noise compared to the bigger issues at hand.   Those issues are (a) That investors need to save more than they spend so as to be able to accumulate sufficient assets for the future and (b) that investment, i.e. market returns, are random, and that the sequence or distribution of market returns is absolutely of critical importance to investment planning.

To this latter point, I want to steer readers to an excellent post by Dr. Wade Pfau who has written some excellent papers in the area of retirement income planning.   Wade’s most recent article, “You Can’t Control When You are Born…Revisiting Sequence of Returns Risks” address my concerns square on.

In the example Mr. Pfau provides, he displays the following table showing investment results for 151 hypothetical different investors who save the exact same amount of money and experience the exact same average return.  The only thing different is when the investor begins and thus, what sequence of returns that the investor experiences.  Though they could expect wealth equal to 10x their salary, the outcomes ranged from a minimum of 2.98x to a maximum of 27.7x.  The difference in results is only explained by the order in which the returns occurred.

wade pfau

To quote Dr. Pfau, “This is sequence of returns risk! People are more vulnerable to the returns experienced when their portfolios are larger because a given percentage change has a bigger impact on absolute wealth. A big portfolio drop at the end could possibly wipe out all of the portfolio gains from the first 25 years of one’s career.”

This readers, is why I am so adamant that a prudent investment policy must include active risk management, and this is why each of the Portfolio Cafe models are built with a risk management component.  For an investor who experiences a significant portfolio loss late in their investment cycle, it is quite possible that the investor will never be able to fully recover and thus be able to experience the retirement lifestyle they had planned.  Since none of us know what the future returns of the market are going to be, our only other choice is to make sure that we follow an approach that can reasonably protect our portfolio from large losses.

The active vs. passive argument focuses your attention on whether or not your returns are “as good as the benchmark” but it says nothing about whether or not the benchmark returns themselves will be adequate in magnitude or in a sequence that assures your investment goals are met.

So the next time someone suggests to you that you should just go buy an index fund, ask yourself, “Do you feel lucky?  Well do ya…?”

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Rising Rates…What Investors Should Do Now

int ratesJust as the Fed’s latest weekly accounting reveals that the Federal Reserve’s holding of publicly traded U.S. Treasury securities pushed above $2 Trillion dollars, the yield on the Ten-Year Treasury reached a new yearly high of 2.89% today.

Back on Dec. 31, 2008, before the Fed began its strategy of “Quantitative Easing,” the Fed owned only $475.9 billion in U.S. Treasury securities. Since then, the Fed’s holdings of U.S. government debt have more than quadrupled.

Perhaps the bond market forgot to read the report issued earlier this year where it was explained in a February 2013 Congressional Research Service report,, “Under QE,”  “the Fed attempts to lower long-term Treasury and MBS [mortgage-backed security] yields directly through purchases that drive down their yields”.

So despite the record amount of purchases, rates are rising…and bond prices are falling.

Interesting too are the comments contained within the following video from Blacrock’s fixed income CIO Rick Rieder, where he states “the volatility in fixed income could actually be higher than the equity market.  You’ve seen it over the last few months. You’ve seen it very quickly in the last few months.”

I have been exclaiming for over a year now that bonds offer a portfolio no value and that the risks associated with owning bonds is asymmetrical…the downside risks far exceed any return potential.

Back in early June, when TLT was trading at $113, I issued a Special Opportunity alert for members, in which I indicated the immediate potential for higher interest rates. ” TLT finished nears its lows last week at $113.16 and for all intensive purposes, there isn’t much chart support.  The $105 area was the level of the price breakout to the upside and there was above average volume at that price too…so that’s an important level.  Below that, I could see TLT eventually hitting $95-$98.”  I had also recommended purchasing TBF (ProFunds Short 20+ Treasury) which was then trading at $30.91

Fast forward.  TLT now trades at $102.47 and TBF is $33.56 (+8.57%).

If we look at the following chart, it seems we are well on pace to reach my price target of $95 which would put yields on the Ten-Year around 3.25%.

tlt

No surprise, the interest sensitive groups such as real-estate and utilities are under pressure as both industries benefit from low-interest rates.  The Point and Figure Bullish Percent chart shown below displays how Real Estate has been declining since June and is now one of the groups leading the market lower in “bear confirmed” status.

real estate

Utility investors should monitor the rising price channel which has defined the trend of utility stocks since the ’09 lows and as shown on the following chart.  At a minimum I would expect to see the XLU (Utility SPDR) reach the bottom of the channel before attempting to bounce.   A material break of this channel would be reason to lighten up exposure to the group.

xlu

Finally, I will present one last chart for everyone who presently wishes that the Fed would begin tapering.

fed-mkt corr

Understand that the S&P  500 is 91% correlated to the level of the Fed’s balance sheet.  And with the Fed owning one-third of the Treasury market among primary bond holders, such a change may be disruptive.

Be careful what you wish for!

Action to Take:  

Investors who are still holding on to bond funds are likely to continue to feel pain.  Reducing exposure to any type of bond fund that owns long maturity bonds will minimize some but not all of the price risk.  A better choice for a portion of ones income investments may be floating rate funds and ETFs such as FLOT.  Such funds invest in bonds whose coupons change with prevailing short-term interest rates and are thus less sensitive to rising rates.

Stock investors should limit exposure to interest sensitive groups such as REITS and utilities.  Bear in mind however that rising rates can put pressure on all stocks so be sure to have a defensive plan ready (hopefully you have already begun implementing it).

In summary, I believe rising interest rates will be very disruptive to the already fragile financial markets and that investors can expect increased turbulence ahead.

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Three Stock Market Indicators that are Signaling Caution for Investors…

dive

Is the stock market getting ready to dive?

Conditions within the U.S. stock market have caused us to issue a Sell Signal against most major U.S. stock averages.  As such, we have recommended that investors hedge their portfolios, tighten up stops, and raise cash levels where appropriate.

Is this just a correction similar to what investors saw in May, or the start of a much larger dive to lower prices?  In this post I will examine three technical indicators causing me to be cautious.

As I wrote to subscribers last week, “Trying to call a top in the market is never an easy task.  Most analyst avoid this altogether, either believing it to be impossible or not worth the career risk of being wrong.  Also true is that tops are a process sometimes taking weeks, months, and some may even argue, years to form.”

The thing about market tops and bottoms is that they exemplify some of the most common human behavioral tendencies that can wreak havoc with ones portfolio.  It’s not our fault…its just our hard coding.

Wall Street is a classic example of crowd behavior where each individual’s dependence on others in the crowd substitutes for lack of rigorous reasoning is pervasive.  Myriad of measures of market optimism and pessimism show that in aggregate, such sentiment among public and financial professionals wax and wane concurrently with the trend and level of the market.  This tendency is not just fairly common: it is ubiquitous.

“Predicting” the Present

One of the most egregious errors of the “crowd” in matters of investing is linear extrapolation:  predicting the future by simply extrapolating the present into the future.  Obviously in a changing world, this approach is doomed to fail.  Because of this practice, investors and those that investors rely upon have been notoriously optimistic at tops and pessimistic at bottoms, often producing devastating results.  What is interesting about this is that within a herd mentality, the stronger the mood of the crowd so to is the strength of the crowd’s conviction and the more inventive is their rationalizations.

Currently, as investors give each other high fives for the recent S&P 500’s record level, the rug is being pulled out from beneath their feet.

One of the most classic forms of technical sell signals is known as “negative divergence”.  In this condition, price of a security makes a new price high, unconfirmed by the technical indicator being followed.   Today, there are a number of technical negative divergences that investors should be aware of.  Let’s review several of them.

Bullish Percent (S&P 500)

The bullish percent is a “participation index” designed to show the percentage of stocks within a given index that are controlled by demand.  When the number (expressed as a percentage of stocks within the given universe) is rising, this is considered a positive as more stocks are gaining strength.  Historically this indicator has been plotted on a Point and Figure chart although I have found the following configuration to be more useful in spotting potential tops and bottoms of intermediate degree.

bpspx

The way I configure this chart is by plotting a 5 and 20 period moving average against the bullish percent level.  Signals are derived when the short term moving average crosses the longer term moving average.  The MACD and the RSI are used to confirm the signal in order to help avoid any whipsaw in the primary indicator.  Over the years I have found this indicator has provided excellent guidance to for identifying important turning points in the market, particularly when the bullish percent has been above 70%.  Over the past year, the sell signals have resulted in more down to sideways price action as investors have so far been eager to buy all of the dips. (With the help of the Fed of course)

What I find most interesting about the current signal is the divergence between the May reading of 90% and the more recent peak of 84%.  This tells us that less stocks participated in the rally to the S&P record.  With the indicator now on a sell signal, it is also telling us that more stocks are succumbing to selling pressure…so taken together this is bearish.  A final observation is that the bullish percent itself displayed negative divergence as each peak in the bullish percent  (January, May, August) has occurred on declining relative strength.  While more subtle, this implies that the participation of stocks was becoming more labored at each successive peak.

S&P 500 Volume Advance-Decline Percent

Another form of breadth indicator, the S&P 500 Volume Advance-Decline Percent.  It’s a breath indicator based on advancing and declining volume.

spxudp

What this shows is that the market has broken a support level accompanied with an increase in declining volume.  This too can be considered bearish.  Another interesting point is that on August 13th, the day of the Nasdaq 100 high of the year, the a/d line was 1287/1835.  So despite what appeared to be a strong close, market breadth indicated otherwise.

NYSI – NYSE Summation Index

NYSI is a summation index of the McClellan Oscillator of the NYSE.  The McClellan Oscillator is a breadth indicator calculated from the advances and the declines for the NYSE.  When the NYSI is rising, it means that the market is generally healthy as the McClellan Oscillator reflects the net advancing issues.  One way of interpreting the NYSI is to look for divergences between the NYSI and and NYSE index.

$nysi

As can be readily seen, the NYSI has been declining against since the market peak in May.  The use of a moving average helps smooth out the direction of the NYSI and the moving average crossover can be used a a market signal.

Conclusion: Price, breadth, and volume indicators have failed to confirm the recent price highs, and they are all reflecting persistent weakness. This is no guarantee that a correction will occur, but the internal conditions show that the market is very vulnerable.

To be clear, it’s still to early to tell if this is the beginning of a much larger correction than we have seen in awhile.  For the SPY, the weekly chart shows that a decline to $155-$160 area would still maintain the rising price channel in effect since last November.  If that level fails to hold, the next meaningful support is in the range of $125-$145.

spy weekly

So, do you think we have seen this year’s high for the S&P 500?

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Monthly Asset-Class Scoreboard

scoreboardThe story of May was the increase in yields on U.S. bonds to their highest level in 13 months and the disruptive dislocation that this caused among other asset classes.  Although long-term bond prices (TLT, iShares Barclays Twenty Year Bond) have been in a pattern of making lower lows and lower highs since last summer, downside momentum picked up in May.

The ripple effect of rising U.S. interest rates extended to not just bond ETFs but also to asset classes such as emerging markets, REITS, telecom, utilities, and dividend stocks.  Many of these asset-classes have benefited from the “manufactured” low yield environment that has sent funds across the globe in search of yield.

What I found interesting in May’s performance is that “minimum volatility” strategies (USMV, iShares MSCI U.S. Minimum Volatility) were among the weakest performers (-2.51%).  This is because these styles or strategies own dividend stocks, many of which that are consumer-staples, a sector that succumbed to profit taking after a stellar multi-month advance.

Of particular interest to bond investors is that only 5 out of 13 fixed-income ETFs are now above their 8-month moving average.  While their is nothing “magic” about he 8-month moving average, it does provide a useful method to identify those ETFs whose trend remains favorable versus those that may be breaking down in price.  I have been cautioning bond investors now for a number of months that the returns on most bonds were not proportional to the risks assumed.

International ETFs were also a source of weakness…in part to the stronger U.S. dollar (a side-effect of higher U.S. rates) and a decline of Japanese equities.  In April, investors were cheering Japan’s announcement of their version of QE but Japan, with debt 245% to GDP has special problems – any effort to import inflation and drive down the yen puts Japanese bond holders as risk.  Bondholders began to have second thoughts sending yields from around 30 bps to over 1% and Japanese equities plunging.

There was no change from April with commodities and precious metals remaining the worst performing asset-classes for May.

SymbolDescription
DBPPowerShares DB Precious Metals
SPYS&P 500 Index
DVYiShares DJ Select Dividend Index
SPLVPowerShares S&P 500 Low Volatility Index
FLOTiShares Barclays Inv. Grade Floating Rate
IWMiShares Russell 2000 Index Fund
MDYS&P MidCap 400 SPDR
AMLPALPS Alerian MLP Infrastructure Index
PGXPowerShares U.S. Preferred Stock
HYGiShares iBoxx High-Yield Corporate Bond
VMBSVanguard Mortgage-Backed Bonds (2-3 year)
EFAiShares MSCI EAFE
AGGiShares Core Total U.S. Bond (4-5year)
IEFiShares Barclays 7-10 Yr Treasury
PCEFPowerShares Closed End Fund Composite
IYRiShares Dow Jones Real Estate REIT
BWXSPDR Barcap Global Ex-U.S. Bond (6-7 year)
LQDiShares iBoxx Investment Grade Bond
TIPiShares Barclays TIP
ELDWisdom Tree Markets Local Debt
TLTiShares Barclays Long-Term Treasuries (15-18 years)
EEMiShares MSCI Emerging Markets
DBCPowerShares DB Commodity Index

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Interview with GMO’s Ben Inker – When “Good” is “Bad” and Balancing Risks.

Ben Inker is a portfolio manager and Co-Head of GMO Asset Allocation team for global investment firm GMO.  Inker explains why he is increasing GMO’s cash levels and treading very carefully in both the stock and bond markets.  Follow this link for the full interview.

inker

Ben likes high quality U.S. stocks and also values holding larger than usual amounts of cash.

Among Portfolio Cafe strategies that fit within his theme, each of our dividend-oriented strategies emphasize high quality, value stocks and raising cash levels when warranted. Year to date, each of the models are ahead of the S&P 500.

Dividend Value + 14.51%

Dividend Aristocrats + 11.71%

Russell 1000 High Yield + 15.30%

Defensive Utilities + 13.44% 

Subscribers to Portfolio Cafe have access to these and four other stock models plus six tactical ETF models.  Please join us today.

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Monthly Asset-Class Scoreboard

scoreboardApril continued the trend favoring most “risk on” asset classes although the top spots now belong to more defensive types of plays – low volatility, dividend, and REIT.  This makes perfect sense given the duration of the stock market’s rise – investors are cashing in higher beta strategies that performed well early in the year, for lower beta strategies now.  We can see that too in how the Small Caps have drifted a little lower in the rankings as well.

One of the noticeable asset-classes showing improvement in April was international stocks, aided in large part due to appreciation in Pacific Rim stocks.  This a result of the aggressive stimulus package announced by the Bank of Japan.  EWJ, the iShares Japan Index soared 8.33% which is now up 18.67% YTD.

Bonds also showed some overall improvement although there were no big changes.  Not that we should expect to see any in the current “risk on” environment.

No surprise, given gold’s April plunge, metal and commodities came in again dead last.

Here is this month’s ranking of asset-classes, from best to worst.

SymbolDescription
DBPPowerShares DB Precious Metals
SPYS&P 500 Index
DVYiShares DJ Select Dividend Index
SPLVPowerShares S&P 500 Low Volatility Index
FLOTiShares Barclays Inv. Grade Floating Rate
IWMiShares Russell 2000 Index Fund
MDYS&P MidCap 400 SPDR
AMLPALPS Alerian MLP Infrastructure Index
PGXPowerShares U.S. Preferred Stock
HYGiShares iBoxx High-Yield Corporate Bond
VMBSVanguard Mortgage-Backed Bonds (2-3 year)
EFAiShares MSCI EAFE
AGGiShares Core Total U.S. Bond (4-5year)
IEFiShares Barclays 7-10 Yr Treasury
PCEFPowerShares Closed End Fund Composite
IYRiShares Dow Jones Real Estate REIT
BWXSPDR Barcap Global Ex-U.S. Bond (6-7 year)
LQDiShares iBoxx Investment Grade Bond
TIPiShares Barclays TIP
ELDWisdom Tree Markets Local Debt
TLTiShares Barclays Long-Term Treasuries (15-18 years)
EEMiShares MSCI Emerging Markets
DBCPowerShares DB Commodity Index

Portfolio Cafe ETF models did quite well with four of the models reaching new equity highs.  Here is a quick summary.

 

ModelPrior Month YTD
Sleep Easy 3.47%4.80%
Vanguard Tactical Allocation2.40%9.50%
Sector ETF Rotation1.56%12.7%
World Traveler6.17%13.4%
Explorer3.89%10.0%
Commodity ETF Rotation-7.86%-9.50%

And while commodities continue to disappoint investors in general, our advice to subscribers for the past several months has been  to avoid this asset-class altogether.

Portfolio Cafe ETF models are constructed using a precise, systematical, mathematical formula designed to always catch the market’s trends, agnostic to trend direction.

How is your portfolio being managed?

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