tag:blogger.com,1999:blog-16101376783036734712024-03-05T16:16:35.847-08:00Sensible InvestmentsA resource for debunking the investments myths peddled by the financial press and Wall Street hype and presenting rational,sensible investing approaches based on sound research and academic findings.
This blog is maintained by Lawrence Weinman MBA an independent Registered Investment Advisor www.lweinmanadvisor1.comLawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.comBlogger708125tag:blogger.com,1999:blog-1610137678303673471.post-16416529694687731362019-02-11T14:13:00.000-08:002019-02-11T14:13:49.465-08:00Passive Crushes Active...But HopeSprings EternalI have written before about the report by S+P which consistently shows the performance of actively managed funds to fail to beat their relevant indices.<br />
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<a href="https://www.morningstar.com/lp/active-passive-barometer" target="_blank">A similar report is produced by Morningstar </a>and shows similarly that performance of active funds is inferior to passive funds. The longer the time frame for evaluation with a sample that includes by definition only funds that survive shows particularly poor performance. Since the study includes all passive funds --many of which carry higher fees than the ETFs in the same categories --one would expect performance of the funds vs.ETFs would show even worse performance for the active funds.<br />
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This report compares passive funds to their actively managed peers in the same asset class.<br />
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Among the key findings:<br />
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In 2018 only 36% of active funds outperformed passive...down from 46% in 2017.<br />
Over 10 years that number drops to only 24%,<br />
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Across all the equity sectors studied only two showed outperformance for active funds over 10 Years. Emerging markets (54.5%) and foreign small mid blend (70.6%). The latter category likely included a limited number of passive funds. Among domestic stock funds the "best" record was for US Small Cap Value at 33.3%. outperformance vs passive over 10 years/ US Large Cap Blend --the category where the most money is invested and the largest number of funds --showed only 10.9%.<br />
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In sum. the evidence shows that investors are far better off with passive rather than active funds particularly when measured against the most important benchmark-- long term performance.<br />
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But hope for active funds springs eternal. The WSJ reports on the growth of actively managed ETFS<br />
moving active management to a new wrapper.<br />
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<a href="https://www.wsj.com/articles/market-turbulence-spurs-demand-for-fledgling-active-etfs-11549627200" target="_blank">Market Turbulence Spurs Demand for Fledgling Active ETFs</a></h1>
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<i>Passive funds still dominate industry, but a flurry of interest in active segment hints investors’ perceptions are shifting</i></h2>
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<i>....<span style="color: #333333; font-family: "exchange"; font-size: 17px;">ETF managers who handpick stocks and bonds drew a record $27.5 billion in new investor cash last year, while inflows into index-tracking ETFs slowed for the first time since 2013, according to Morningstar. So-called strategic beta funds, a hybrid between active and passive management, likewise had a banner year, garnering $74 billion.</span></i></div>
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These funds may have lower management fees than active funds but still higher than passive ETFS. They carry their own complications.Since they must disclose their holdings each day they run the risk of making public their strategies and holdings thus reducing what is seen as their comparative advantage. Funds run the risk of traders and others taking advantage of this information for short term profits.Additionally it is quite possible that these funds will run into the complication encountered with closed end mutual funds and to a lesser extent with passive ETFS; The fund and may trade at a premium or a discount to the actual holdings in the fund, It would be difficult for the market makers to consistently be able to deliver a portfolio matching fund holdings that unlike a passive fund would frequently, Several fund companies are petitioning the SEC to have active etfs without daily disclosure,<br />
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Judging by the record of actively managed mutual funds including last year's volatile markets it would be hard to give much credence to the claims expressed in the article :<br />
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<i>But the rise of ETFs has also coincided with a decade long bull market that has left most stock pickers in the dust. Less than one quarter of U.S. active funds beat their index-tracking peers in the past decade, according to Morningstar. Investors fled.</i></div>
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<i>Now the prospect of more turbulent markets has investors reconsidering their commitment to plain-vanilla indexing, Mr. Rosenbluth said. Active ETFs are especially appealing because, while more expensive than passive ETFs, they can be significantly cheaper than actively managed mutual funds, he added.</i></div>
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The logic here is puzzling 2017 markets (in which investors pulled money from equity ETFs was volatile and active funds performed poorly </div>
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In what can only be seen as a case of hope springs eternal the article notes:</div>
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<i>Now the prospect of more turbulent markets has investors reconsidering their commitment to plain-vanilla indexing, </i></div>
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<i>As can be seen by the Morningstar report particularly the long term data which include periods of low and high volatility it seems unlikely investors switching to active management in ETFs will fare any better than active mutual fund investors.</i></div>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-29919439392034501202019-02-07T07:48:00.000-08:002019-02-07T11:51:23.641-08:00A Cautionary Tale About Investing "Geniuses"<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU1tIXyO-2FLsOekv3I2iNz4a0HH7zqaexqeDztyx8YsFQoZb7oODJMDj7cMmN5q6D607JW0b_rK9ebBmU6DGD8tAXnAENUMhN_u_rUcH7N24HMMa9mMl3LPjf8c7mKDas9IdWH7jJHMF_/s1600/grossjanus.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="168" data-original-width="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU1tIXyO-2FLsOekv3I2iNz4a0HH7zqaexqeDztyx8YsFQoZb7oODJMDj7cMmN5q6D607JW0b_rK9ebBmU6DGD8tAXnAENUMhN_u_rUcH7N24HMMa9mMl3LPjf8c7mKDas9IdWH7jJHMF_/s1600/grossjanus.jpg" /></a></div>
This <a href="https://www.wsj.com/video/the-legacy-and-career-of-bill-gross/ECAB0422-AE44-418F-AF20-4A4A75430013.html?mod=trending_now_video_4" target="_blank">wsj video report on Bil Gross</a> who just announced his resignation from investment management gives a good brief summary of his career and a cautionary tale for investors looking to a "genius investor" to "go anywhere" particularly in the bond part of their allocation.<br />
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Well before his departure from PIMCO (which he cofounded) and his dismal final act at Janus Henderson I voiced hesitations with the use of Gross' Total Return Bond Fund as a core bond holding (which was how it was marketed, and the fund was often the only or one of only a few bond fund choices in 401k plans) despite its admirable performance for most of Gross' tenure.<br />
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The reason was the lack of transparency in the fund. The mandate for the fund let Gross go anywhere in fixed income, making large bets on developments in the bond market across the globe frequently making use of options and futures and even delving into equity derivatives. Gross rode the huge bond market rally as interest rates reached historic lows (see below price moves inversely to yield) it no doubt gave him a tailwind to his returns . His<a href="https://www.bloomberg.com/news/articles/2019-02-04/bill-gross-retires-" target="_blank"> track record faded just as the Federal Reserve was ending its era of zirp (zero interest rate policy).As assets in the fund left in response to poor performance Gross left Pimco in amidst a messy breakup.</a><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJYk9BsLynENBpoAKWX7KO6H9z1w1jkXF2LuVzYh4PtfrP6OWPkoseUhzA7-lbaNxoqRF1bCEj5LZOVyGhC80GNbWEsLtNnrajY51k_GMZlIa0NJhfLYMXxOTpeS8DUCSSlHJ8RFAg23tr/s1600/fredgraph.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJYk9BsLynENBpoAKWX7KO6H9z1w1jkXF2LuVzYh4PtfrP6OWPkoseUhzA7-lbaNxoqRF1bCEj5LZOVyGhC80GNbWEsLtNnrajY51k_GMZlIa0NJhfLYMXxOTpeS8DUCSSlHJ8RFAg23tr/s400/fredgraph.png" width="400" /></a></div>
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At Janus Henderson he managed an Unconstrained bond fund which as the title suggests let him take big bets across markets including significant positions outside the stock market, The fund <a href="https://www.bloomberg.com/opinion/articles/2019-02-05/bill-gross-misfired-at-janus-but-he-had-the-right-idea" target="_blank">failed to deliver </a><br />
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<span style="background-color: white; font-family: , "georgia" , "cambria" , "times new roman" , "times" , serif; font-size: 18px;"><i>His unconstrained fund lagged the aggregate bond index by 1.6 percentage points a year from October 2014 through January, despite that Gross took more risk relative to the broad bond market than he had as a total return manager (a standard deviation of 3.5 percent for the unconstrained fund compared with 2.8 percent for the index).</i></span><br />
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<a href="https://www.bloomberg.com/opinion/articles/2019-02-05/bill-gross-misfired-at-janus-but-he-had-the-right-idea" target="_blank">One commentator</a>r had an interesting view on Gross's strategy in the last round of his career: that he had the right idea but just bad results...wrong for the right reasons" I couldn't disagree more.<br />
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<a href="http://bill%20gross%20misfired%20at%20janus.%20but%20he%20had%20the%20right%20idea.%20active%20managers%20need%20to%20make%20risky%20wagers%2C%20even%20if%20they%20could%20go%20bust./" target="_blank">Bill Gross Misfired at Janus. But He Had the Right Idea.</a></h4>
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Active managers need to make risky wagers, even if they could go bust.</div>
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<i>As I’ve said <a href="https://www.bloomberg.com/opinion/articles/2019-01-17/jeffrey-vinik-thinks-he-can-beat-the-stock-picking-bots" style="background-color: transparent; border-bottom-color: rgb(0, 0, 0); border-bottom-style: dotted; border-image: initial; border-left-color: initial; border-left-style: initial; border-right-color: initial; border-right-style: initial; border-top-color: initial; border-top-style: initial; border-width: 0px 0px 1px; color: black; font-family: inherit; font-stretch: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; overflow-wrap: break-word; padding: 0px; text-decoration-line: none; vertical-align: baseline;" target="_blank">repeatedly</a> about stock pickers, investors no longer need a bond manager to tinker around the edges of the bond market. There’s a <a href="https://www.bloomberg.com/opinion/articles/2018-12-04/investors-deserve-a-peek-at-bond-managers-tricks" style="background-color: transparent; border-bottom-color: rgb(0, 0, 0); border-bottom-style: dotted; border-image: initial; border-left-color: initial; border-left-style: initial; border-right-color: initial; border-right-style: initial; border-top-color: initial; border-top-style: initial; border-width: 0px 0px 1px; color: black; font-family: inherit; font-stretch: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; overflow-wrap: break-word; padding: 0px; text-decoration-line: none; vertical-align: baseline;" target="_blank">growing</a> number of low-cost index funds that mimic total return bond funds by delivering modestly more credit risk than the broad market with similar average maturity. Many of those index funds are relative newcomers, so they don’t yet have a long performance history. But there’s no reason to believe they wouldn’t perform at least as well as total return bond funds, particularly given their lower cost.</i></div>
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<i>To the extent that investors need a bond manager, it’s to make the kind of unconstrained calls that Gross made at Janus Henderson, knowing full well that those calls could be a bust just as easily as a boon. You can’t get that from an index.</i></div>
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I would agree to a limited extent bond investors no longer need an active fund manager that strays little from the overall bond market. But they hardly need to allocate the bond portion of their portfolio _- which should be the most stable part of their portfolio- to a non transparent hedge fund type vehicle which could be anything from Treasury bonds to bets on the spread between Turkish and German Government bonds.</div>
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Investors are far better off allocating their bond investments across ETFs which are transparent as to the maturity, credit rating and geography of their bond investments. They don't need an active bond fund manager either with a conservative mandate of an "unconstrained" strategy.</div>
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Betting on manager skill in a hedge fund type vehicle is no more likely to be a road to investing success than in equities. As the headline implies he could go bust...not a pretty outcome...even more so for the part of an asset allocation which is to be the more stable: the bond side.</div>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-31789250971277383292019-01-29T04:46:00.003-08:002019-01-29T04:47:10.393-08:00A Good Start to 2019 for Value InvestorsValue investors had a hard time in 2018 watching their holdings fall much more than the overall US market: Value and small value have strongly outperformed the overall US market and the momentum factor ETF thus far in 2019.<br />
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2019 ytd (Momentum in black,value in gold, small value in blue, total US market in green) Performance top volatility bottom in bar chart.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq9zxyl4Vqco3_LDjiaNQpWhR1za2HTSJIbx350ZAOtckxgjEc8BNUA4LASOT2SS2za7WboAnynxdrTYGGSYzX9uhrt93DLVtY5cqafBLknHVKXRakX0PK1oSSdzbGbq7yvpQghgdIQZQr/s1600/20191.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="235" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgq9zxyl4Vqco3_LDjiaNQpWhR1za2HTSJIbx350ZAOtckxgjEc8BNUA4LASOT2SS2za7WboAnynxdrTYGGSYzX9uhrt93DLVtY5cqafBLknHVKXRakX0PK1oSSdzbGbq7yvpQghgdIQZQr/s400/20191.png" width="187" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3nc2JyFOPb658QsasC1_KQ1lcUZp-7I-QJs07eJLcOZFuuIJ6wJDGhS0uN4t6sgeZOFKtHpBe1sdK-nHiTVsN7UBcZa3BRZ5hoUUS1hWKTxWPzeqj2y2W6tzZZ_Ju-7xcF-D084mhZEkw/s1600/20192.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3nc2JyFOPb658QsasC1_KQ1lcUZp-7I-QJs07eJLcOZFuuIJ6wJDGhS0uN4t6sgeZOFKtHpBe1sdK-nHiTVsN7UBcZa3BRZ5hoUUS1hWKTxWPzeqj2y2W6tzZZ_Ju-7xcF-D084mhZEkw/s1600/20192.png" imageanchor="1" style="-webkit-text-stroke-width: 0px; background-color: transparent; color: #0066cc; font-family: Times New Roman; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; margin-left: 16px; margin-right: 16px; orphans: 2; text-align: center; text-decoration: underline; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3nc2JyFOPb658QsasC1_KQ1lcUZp-7I-QJs07eJLcOZFuuIJ6wJDGhS0uN4t6sgeZOFKtHpBe1sdK-nHiTVsN7UBcZa3BRZ5hoUUS1hWKTxWPzeqj2y2W6tzZZ_Ju-7xcF-D084mhZEkw/s400/20192.png" width="400" /></a></div>
This is in sharp contrast to 2018 where value stocks had larger losses than the total market or momenetum.<br />
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-15654781747018582052019-01-15T13:13:00.001-08:002019-01-15T13:17:59.758-08:00Update on High Yield Bonds<br />
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Along with the stock market the high yield bond market has had a strong rally since the turn of the year. The secondary market and ETFs had strong performance as did the market for new issues<br />
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as the <a href="https://www.wsj.com/articles/a-junk-bond-drought-is-making-investors-nervous-11547116200?mod=hp_lead_pos4" target="_blank">wsj</a> reported:<br />
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<i>A long freeze in the junk bond market thawed Thursday as midstream energy company Targa Resources Partners LP became the first business to sell below-investment-grade bonds since November.</i></div>
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<i>Targa, which has credit ratings at the upper end of the speculative-grade spectrum, sold $1.5 billion of eight and 10-year bonds, twice the amount initially expected. In another sign of a strengthening corporate debt market, investment-grade <a href="https://quotes.wsj.com/BUD" style="color: #0080c3; margin: 0px; outline: none; padding: 0px; vertical-align: baseline;">Anheuser-Busch InBev</a> <span class="company-name-type" style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial; border: 0px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">SA</span>also sold $15.5 billion of bonds Thursday, the largest since October, as the beer giant moved to repay existing debt.</i></div>
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The high yield spread over Treasuries has dropped sharply from 5.35 on Jan 2 to 4.83 jan 8<br />
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And after experiencing a terrible 2018, underperforming the aggregate bond market (AGG) in 2018...</div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCDJOPUrRcFQ9TEbgHHyQmC0sYa6dUZ7O1huT3GWjeV97rZWYKP0XQGK_C-b3EjJtsXDmu7xTNm9KbG05Ixn62ifNPWhh_JAkHZB-DQLLri-cAC1IPXSKA5ZgUYd7oNxjWbXhsrkui46Lw/s1600/2018hyld.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCDJOPUrRcFQ9TEbgHHyQmC0sYa6dUZ7O1huT3GWjeV97rZWYKP0XQGK_C-b3EjJtsXDmu7xTNm9KbG05Ixn62ifNPWhh_JAkHZB-DQLLri-cAC1IPXSKA5ZgUYd7oNxjWbXhsrkui46Lw/s400/2018hyld.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">High Yiekd ETFa 2018 JNK<br />
<br />
2018 returns<br />
JNK (intermediate term high yield) -3.3%<br />
SJNK (short term high yield in blue) -.3%<br />
HYLD(short term high yield in gold)+.2%<br />
AGG (aggregate bond market in blue)+ .1%</td></tr>
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...2019 has started out strongly for high yield bond ETFs</div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCqgIMU4tUPWABakOo8-RcAoqyaoxL2RKKxS8xEpc9VEoBOIrVpM9ZlGkrBn4wbM-W2KZNA-9rCreJWSaAkMoqmFBasYrnq5zilpmzrUCQ8s5En_jRUMau-M0rcEuBG0SBnLfmjCnm_zb_/s1600/hyg2019.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCqgIMU4tUPWABakOo8-RcAoqyaoxL2RKKxS8xEpc9VEoBOIrVpM9ZlGkrBn4wbM-W2KZNA-9rCreJWSaAkMoqmFBasYrnq5zilpmzrUCQ8s5En_jRUMau-M0rcEuBG0SBnLfmjCnm_zb_/s400/hyg2019.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">HIgh Yield Bonds YTD as of Jan 8<br />
JNK +3.5%<br />
SJNK+2.3%<br />
HYLD+2.0%<br />
AGG 0</td></tr>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-14859950558392114322019-01-15T13:12:00.000-08:002019-01-15T13:12:37.070-08:00Opportunity in Asian Emerging Markets ?<br />
WSJ notes<br />
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<a href="https://www.wsj.com/articles/better-value-than-u-s-stocks-asian-shares-hit-fire-sale-valuations-11547526216" target="_blank">Better Value Than U.S. Stocks: Asian Shares Hit Fire-Sale Valuations</a></h1>
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<a href="https://www.wsj.com/articles/better-value-than-u-s-stocks-asian-shares-hit-fire-sale-valuations-11547526216" target="_blank">Regional stock valuations are at their lowest levels in years</a></h2>
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<i>Compared with forecast earnings, regional share valuations are at their lowest levels in about five years, according to a FactSet index covering thousands of Asia-Pacific stocks. They trade at about 12 times expected earnings for the next 12 months, while FactSet shows U.S. stocks trade at about 15.5 times, roughly in line with their 10-year average.</i></div>
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<i>Set against free cash flow, the stocks look even better value. On that basis, Asian equities are at their cheapest levels in more than a decade, below even lows hit at the depths of the financial crisis.</i></div>
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Despite a dismal 2018 (GMF emerging markets ETF -14.2 vs-4.6 for SP 500 ) emerging market Asian stocks outperformed the US in the fourth quarter (-6.4% vs -13.8% for sp 500) and are up 2.0% ytd (3% sp 500).</div>
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GMF is very sensitive to short term news reports related to China's domestic economy and US Chinese trade relations. For long term investors these can be considered "noise" and declines in response to news may turn out to be excellent entry points for long term investors.</div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-81649917891800861552019-01-08T12:47:00.000-08:002019-01-08T12:47:06.480-08:002018 Market Review<br />
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US stock markets ended the year with sharp declines and
extreme intra and inter day volatility during the fourth quarter. The US market ended the year with its worst
performance since 2008. Perspective is in order, however, the decline in 2008
was 36% for the total US stock market
(total return) vs -5.2% for 2018.
Although the US underperformed
non US markets in the fourth quarter it far outperformed those markets
for the entire year.<o:p></o:p></div>
<div class="MsoNormal">
Below is total return for total US stock market ETF (VTI
green) and world ex North America (VEA blue) for 2018:<o:p></o:p></div>
<div class="MsoNormal">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_xHQvjUZ0tdVudBQHgtD93OLnNV6-3zZvJyU-KWK7wu9e_k1PhAJYUTyUzX1zafivOFRBBFKoJiUwnriNIvV6a22Dyr0T-6zrQad2eaiNOzjIeUsvSerykEoha4fxMvkn1khxB4k-FW4x/s1600/ye1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_xHQvjUZ0tdVudBQHgtD93OLnNV6-3zZvJyU-KWK7wu9e_k1PhAJYUTyUzX1zafivOFRBBFKoJiUwnriNIvV6a22Dyr0T-6zrQad2eaiNOzjIeUsvSerykEoha4fxMvkn1khxB4k-FW4x/s400/ye1.png" width="400" /></a></div>
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The list of reasons for the decline includes the following:<o:p></o:p></div>
<div class="MsoNormal">
</div>
<ul>
<li>Fears of a “trade war” between the US and China with
negative impact for US exporters and the overall US economy and for that of
China the worlds second largest economy.
Economic data from China already show a significant slowing of economic
activity.</li>
<li>Slow growth from Europe due to the continued complications
of Brexit and tensions related to Italy as well as fallout from protectionist US
trade policy.</li>
<li>Governance issues related to US domestic politics currently
evidenced by the US government slowdown.</li>
<li>Fears that the US is headed towards slower growth, if not a
recession. while the Federal Reserve remains committed to continuing a
tightening policy for the near term future.</li>
<li>Regulatory and other issues related to the future earnings
prospects of the stocks that dominated during the market rally (the “faang
stocks of Facebook, Amazon, Apple, Netflix and Google)</li>
</ul>
<o:p></o:p><br />
<div class="MsoNormal">
<o:p></o:p></div>
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<o:p></o:p></div>
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<o:p></o:p></div>
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<o:p></o:p></div>
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<br /></div>
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US Stock Market<o:p></o:p></div>
<div class="MsoNormal">
The US market fell 14.2% in the fourth quarter closing the
year down (total return for the total US stock market index), Market movements
were extremely volatile no doubt related to the large portion of each day’s
trading which is based on computer generated trades such as algorithmic trades
or index instruments of varying types. The technology leaders took the hardest
fall in the fourth quarter but their strong performance during the earlier part
of the year meant that the tech heavy Nasdaq index lost only .1% for 2018 and
XLK the technology ETF was +.1%,<o:p></o:p></div>
<div class="MsoNormal">
Similarly, despite the sharp retreat of momentum stocks in
the fourth quarter they still outperformed value stocks for the year (see table
below) among smart beta factor ETFS. The minimum volatility ETF showed itself
to live up to expectations and outperformed other factors in the volatile down
market.<o:p></o:p></div>
<div class="MsoNormal">
US Stocks<o:p></o:p></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 415px;">
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Total Return (%)<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
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<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
4q<o:p></o:p></div>
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2018<o:p></o:p></div>
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<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
3 yr<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Vti<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
total us<o:p></o:p></div>
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-14.2<o:p></o:p></div>
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<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-5.2<o:p></o:p></div>
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27.4<o:p></o:p></div>
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Mtum<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
momentum<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-15.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-1.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
39.6<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Usmv<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
minimum volatility<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-7.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
1.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
31.3<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Vlue<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
value<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-16.8<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-11.1<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
23.2<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Qual<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
quality<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-14.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-5.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
23.8<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 7; mso-yfti-lastrow: yes;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
Vbr<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
small value<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-17.5<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
-12.3<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
20.6<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Non US Stock Market<o:p></o:p></div>
<div class="MsoNormal">
Emerging and Developed international markets had dismal
performance throughout 2018 although they managed to outperform the US in the
fourth quarter. <o:p></o:p></div>
<div class="MsoNormal">
In the case of emerging markets there is evidence of an economic
slowdown most notably in China due to the difficulties connected with
implementing China’s domestic growth strategy, overextension of credit and
difficulties related to trade tensions with the US Other emerging markets were
affected by the trade tensions as well.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAGBmLdHkWcRqFkAeS1TaoQc9ixY6vvsXcPMNFPC2K1lhHqjV-3YrNyBf9yDz6pBxPOra-gJkDHWbK8gTd1hztbFfNSJ5Y-j3NrLzPIijPMNu5D5k-5LH3o7BYBfzBPH78I45QiT-CMae3/s1600/ye2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="482" data-original-width="1200" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAGBmLdHkWcRqFkAeS1TaoQc9ixY6vvsXcPMNFPC2K1lhHqjV-3YrNyBf9yDz6pBxPOra-gJkDHWbK8gTd1hztbFfNSJ5Y-j3NrLzPIijPMNu5D5k-5LH3o7BYBfzBPH78I45QiT-CMae3/s400/ye2.png" width="400" /></a></div>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Europe continued to be plagued by slow growth and was also affected
by trade tensions with the US. Germany (etf ewg ) was the worst performing
market in Europe reflecting both the weakness in the local market and the
weakness of the Euro. The lack of resolution of how Brexit will proceed weighed
on the British pound and the UK stock market and its impact was felt in other
European markets as well.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
US Bond Market<o:p></o:p></div>
<div class="MsoNormal">
The US market went through extreme volatility with the
Federal Reserve continuing a policy of raising interest rates yet the bond
market showing pessimism towards prospects for future economic growth. The
Federal Reserve raised rates in December, the fourth increase for 2018 and
indicated intention to continue rate hikes in 2019, The Fed policy is based on
a positive outlook for the US economy and a desire to proactively move against
any incipient inflation.<o:p></o:p></div>
<div class="MsoNormal">
For bond market participants the “message of the market” is far
more pessimistic with regards to the US economy. After starting the year with a
10 year bond yield of 2.48% taking the interest rate on the ten year treasury
bond over 3.2% in October and November reflecting positive expectations for the
US economy and therefore higher rates. The market reversed its outlook towards
the end of the year. The ten year treasury bond ended the year at 2.69% , an
extremely low rate in an environment of the Fed raising rates. .<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZo6bXxvSfjGCHjA1kXX0V6ojNBsV31Ajf7gWkDUxDy3yAIRCTjqBWSobuIpqz0C38s7kt9DToLfPFmym4naL-3LwTpOGo7ixHd2v8OThevpxf14_OBesTegyhXv4BbNJY7zq68Dj9Zaz4/s1600/ye3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZo6bXxvSfjGCHjA1kXX0V6ojNBsV31Ajf7gWkDUxDy3yAIRCTjqBWSobuIpqz0C38s7kt9DToLfPFmym4naL-3LwTpOGo7ixHd2v8OThevpxf14_OBesTegyhXv4BbNJY7zq68Dj9Zaz4/s400/ye3.png" width="400" /></a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Other indicators of
the message of the bond market which show an outlook for slower US growth, low
inflation, and low interest rates can be seen in the market for inflation
protected treasury bonds ,the narrow spread between short term and long term
interest rates, and futures contracts on the federal funds (overnight) interest
rate. The fall in longer term yields (increase in prices) meant a recovery in
the aggregate US bond index (AGG) which ended the year +.1% and the long term
Treasury ETF (TLT) +.5%.<o:p></o:p></div>
<div class="MsoNormal">
Another reflection of a pessimistic view for the US economy
was the widening of spreads between high yield bonds and investment grade bonds
during the fourth quarter with high yield bond prices declining along with the
US stock market. The most widely traded high yield ETF HYG fell 4.4 % in the fourth quarter<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Looking Forward<o:p></o:p></div>
<div class="MsoNormal">
Looking at the list of factors that generated the market
decline at the end of 2018 they all continue to hang over the market.
Resolution of trade issues with China would give some support to the stock
markets in both the US and abroad. The negative profit outlook now built into
the US market may be overdone which would mean the now lower valuations for US
stocks may leave room for price increases from current depressed levels. The
current P/E for the S+P 500 is a bit under 19 vs. close to 25 at the beginning
of 2018 Sentiment seems almost uniformly pessimistic: usually a buying
opportunity for disciplined long term investors. Non US markets are very low
valuation levels from a valuation perspective emerging markets are likely the
most attractive current p/e is 10.5 vs 13.2 in January of 2018.<o:p></o:p></div>
<div class="MsoNormal">
Federal Reserve policy will be a focus of the stock market
participants. Currently the stock market sees Fed policy as a negative with the
central bank in a tightening mode based on their optimistic view of the
economy. The long period of near zero interest rates was a major factor giving
a boost to the US stock market the end of that policy as well as the unwinding of
the bond purchases in quantitative easing presents a negative towards the US
market. <o:p></o:p></div>
<div class="MsoNormal">
The Federal Reserve indicates that its policy is “data
dependent” so that any indications of an economic slowdown will likely mean an
end to the tightening policy and perhaps even interest rate cuts later in 2019.
Should the Fed’s optimism on the economy prove correct rate hikes are likely to
continue but it would mean that the stock markets view for the economy was
overly pessimistic.<o:p></o:p></div>
<div class="MsoNormal">
One thing that seems near certain is that volatility will be
high in both the stock and bond markets as can be expected at market inflection
points. Structural changes in the
marketplace with activity dominated by algorithmic traders and index
instruments exacerbate volatility. But the bottom line for investors is that
market timing is impossible and the best strategy for long term equity
investors is to stick with their long term plans, acknowledge that part of the
price for higher long term returns for stocks vs.bonds and cash is higher
volatility and periods with short term losses.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
</div>
<table align="left" border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 6.75pt; margin-right: 6.75pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-table-anchor-horizontal: page; mso-table-anchor-vertical: paragraph; mso-table-left: 0in; mso-table-lspace: 9.0pt; mso-table-rspace: 9.0pt; mso-table-top: 1.6pt; mso-yfti-tbllook: 1184; width: 433px;">
<tbody>
<tr style="height: 15.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Total
Return (%)<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
US
Stocks<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
4q<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
2018<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
3 yr<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
vti<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
total
us<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-14.2<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-5.2<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
27.4<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
mtum<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Momentum<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-15.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-1.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
39.6<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
usmv<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
minimum
volatility<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-7.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
31.3<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
vlue<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Value<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-16.8<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-11.1<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
23.2<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
qual<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Quality<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-14.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-5.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
23.8<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 7;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
vbr<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
small
value<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-17.5<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-12.3<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
20.6<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 8;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 40.5pt; mso-yfti-irow: 9;">
<td nowrap="" style="height: 40.5pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Non
US Stocks<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
veu<o:p></o:p></div>
</td>
<td nowrap="" style="height: 40.5pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
world
ex us<o:p></o:p></div>
</td>
<td nowrap="" style="height: 40.5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-11.5<o:p></o:p></div>
</td>
<td nowrap="" style="height: 40.5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-14.2<o:p></o:p></div>
</td>
<td nowrap="" style="height: 40.5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
12.6<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 10;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
gmf<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
emerging
asia<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-7.8<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-14.2<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
25.8<o:p></o:p></div>
</td>
</tr>
<tr style="height: 9.6pt; mso-yfti-irow: 11;">
<td nowrap="" style="height: 9.6pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
fez<o:p></o:p></div>
</td>
<td nowrap="" style="height: 9.6pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
euro
zone<o:p></o:p></div>
</td>
<td nowrap="" style="height: 9.6pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-12.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 9.6pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-15.8<o:p></o:p></div>
</td>
<td nowrap="" style="height: 9.6pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
3.1<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 12;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
ewg<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
Germany<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-14.8<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-21.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
0.5<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 13;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"></td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 14;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
US
Bonds<o:p></o:p></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
vgsh<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
short
term us govt<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
2.8<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 15;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
vcsh<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
short
term inv grade<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
0.7<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
0.9<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
6<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 16;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
bsv<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
short
term blend<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.3<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
4<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 17;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
flot<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
floating
rate<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-0.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.5<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
4.8<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 18;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
tlt<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
long
term us treas<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
4.6<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-1.5<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
9.1<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 19;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
agg<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
aggregate
us bond<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
1.9<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
0.1<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
6.4<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 20;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
hyld<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
short
term high yield<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-6.4<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
0.2<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
29.9<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 21;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 61.5pt;" valign="bottom" width="82"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
sjnk<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 119.0pt;" valign="bottom" width="159"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
short
term high yield<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-3.9<o:p></o:p></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: page; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-left: .05pt; mso-element-top: 1.6pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
-0.3<o:p></o:p></div>
</td>
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19.9<o:p></o:p></div>
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hyg<o:p></o:p></div>
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high
yield<o:p></o:p></div>
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-4.4<o:p></o:p></div>
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-2<o:p></o:p></div>
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18<o:p></o:p></div>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-40936845907650339762018-12-22T08:11:00.000-08:002018-12-22T08:11:08.171-08:00Message From the Bond MarketIn its' statements accompanying Wednesday's announcement of an interest rate hike the Federal Reserve indicated confidence in the growth of the US economy and the prospect for further interest rate hikes to limit potential inflation risks.The recent sharp drops in the stock market seems to indicate skepticism as to those prospects.<br />
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Over in the bond market the signals are fairly clear: the market sees little prospect for inflation,risk of recessionary conditions and consequently a negative view towards Federal Reserve policy as leaning too heavily towards tight money/higher rates.<br />
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A few graphs will give a snapshot of the bond market's message.<br />
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The Federal Reserve has been on the path of reversing the10 year period of zirp or near zirp= zero interest rate policy/quantitative easing which began in response to the 2008 financial crisis.The ostensible rationale for such hikes is to slow economic growth and prevent inflation, On Wednesday the Fed raised rates by .25% and indicated further rate increases in 2019:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYHOsvwhpE-0FinL2GoWbVVFJnuwu_dKROpqEc7XJGt4VmsTOS-PRs4cdM93bn3DudC45__P8S8jB8qDhAmDN4cNWh4_teNfXpyQIo_x-jkzZy7OXZmcfOlwUiJ7upRNS7q-NTQcPq33ny/s1600/fredgraph.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYHOsvwhpE-0FinL2GoWbVVFJnuwu_dKROpqEc7XJGt4VmsTOS-PRs4cdM93bn3DudC45__P8S8jB8qDhAmDN4cNWh4_teNfXpyQIo_x-jkzZy7OXZmcfOlwUiJ7upRNS7q-NTQcPq33ny/s400/fredgraph.png" width="400" /></a></div>
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But the message of the markets indicates little fear of inflation.<br />
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This can be seen most clearly in the 10year breakeven rate for TIPs Treasury Inflation Protected bonds. The rate subtracts the rate on tips from the rate on conventional bonds of the same maturity. If inflation exceeds that number TIP holders profit. Below is a chart of 10 year breakeven rates for 10 year bonds.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhIkhtK1xjxslKq6cRd7l-xIQw9dXghQVo8C8Jsm80Fvm1142V5doTn84GLJHAc3Eqm1Vp471-AuaJ1M3vuRb0uemHPQOntu49D7C2gWChfUo0wdRmj1hvTOF-hjHfs7snieyri3RzcCNr/s1600/be.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhIkhtK1xjxslKq6cRd7l-xIQw9dXghQVo8C8Jsm80Fvm1142V5doTn84GLJHAc3Eqm1Vp471-AuaJ1M3vuRb0uemHPQOntu49D7C2gWChfUo0wdRmj1hvTOF-hjHfs7snieyri3RzcCNr/s400/be.png" width="400" /></a></div>
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Another measure of inflation expectations is the rate on conventional Treasuries. Despite the Feds inflation fears the market of late has brought 10 year interest rates down from a recent peak just above 3.2%. This indicates a reduced fear of inflation. No one would purchase a 10 year Treasury bond yielding if they expected future inflation to exceed that rate and produce a negative real return the recent decline in ten year Treasury yields indicates lower inflation fears.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-Ky3lTcA-3SsyVKFBx5Ek3kgqPjsFZNLbwBI8cXI6l2aBaw8rkP2IMGnHCWTF_e1vI0YHf8kU-z2kYlH-sAS1cQl_YF7g-vq73RYybqY3Nw87f22VSdTmwyY3NBS8EdhAH1foPR94iCO2/s1600/10+year.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-Ky3lTcA-3SsyVKFBx5Ek3kgqPjsFZNLbwBI8cXI6l2aBaw8rkP2IMGnHCWTF_e1vI0YHf8kU-z2kYlH-sAS1cQl_YF7g-vq73RYybqY3Nw87f22VSdTmwyY3NBS8EdhAH1foPR94iCO2/s400/10+year.png" width="400" /></a></div>
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Another indicator of market sentiment is the spread between short term rates and long term rates. The Federal Reserve can control the overnight Fed Funds rate but not longer term rates. The "spread" (differential) between short term and long term rates indicates the markets assessment of the extent to which Federal reserve tightening is sufficient or excessive.The current gap between Fed funds rates and ten year Treasury bonds is at the extremely low level of. The is indicates the market my feel the Fed has "gotten ahead of itself" with short term rates quite high relative to the market expectation of future inflation reflected in longer term interest rates.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEio-TecAi8i-YGONkUKB9LrzhyphenhyphenUQvsfW4f2zjEU5pAdA5ATeYedwaaBuAN-Apy2N1OHMBfEEEmC4WKcGoSj4LldiSSP0lsZJ3V1npPFjsnKFU8eaCrZfMnxbNFVVlXwtx0SpiYj7x1OhZx3/s1600/10+year+minus.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEio-TecAi8i-YGONkUKB9LrzhyphenhyphenUQvsfW4f2zjEU5pAdA5ATeYedwaaBuAN-Apy2N1OHMBfEEEmC4WKcGoSj4LldiSSP0lsZJ3V1npPFjsnKFU8eaCrZfMnxbNFVVlXwtx0SpiYj7x1OhZx3/s400/10+year+minus.png" width="400" /></a></div>
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Finally, there is the risk of recession, A widening of spreads between Treasury bonds and investment grade corporate bonds and between high yield (junk) bonds and investment grade Treasuries indicated increased fear of recession and defaults on credit bonds.<br />
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Inflation grade bonds vs Treasuries<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz-qh2DWWpj-yNfY7uXlNDEAy0Lu4OaqP2kOp_euKOPforvqPbCXQoOep7BrP6Ksob8AyalhIpSiPKTLj1DElTr_q9LZnSx3mh7ppleplwrP0cESxGxd6LgKdC0IBoA9IRF9CnGRFeu2Z1/s1600/fredgraph+%25283%2529.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz-qh2DWWpj-yNfY7uXlNDEAy0Lu4OaqP2kOp_euKOPforvqPbCXQoOep7BrP6Ksob8AyalhIpSiPKTLj1DElTr_q9LZnSx3mh7ppleplwrP0cESxGxd6LgKdC0IBoA9IRF9CnGRFeu2Z1/s400/fredgraph+%25283%2529.png" width="400" /></a></div>
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High Yield Spreads:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLF0ihjPIPXE2zXDw3WTvNuxWciQx18cL92gLphlBMt7T2GR_ZTe_HD_zqZqFGYasIvXUvRoYSk7e54wnIPriBbOUPXrHYrID1SYW6vOhEqLoPDKN0iKniduVAlBEOtCpWib6QhnAsmaEA/s1600/fredgraph+%25284%2529.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="470" data-original-width="1168" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLF0ihjPIPXE2zXDw3WTvNuxWciQx18cL92gLphlBMt7T2GR_ZTe_HD_zqZqFGYasIvXUvRoYSk7e54wnIPriBbOUPXrHYrID1SYW6vOhEqLoPDKN0iKniduVAlBEOtCpWib6QhnAsmaEA/s400/fredgraph+%25284%2529.png" width="400" /></a></div>
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It remains to be seen who is correct in their assessment of economic conditions, But it is clear at present there is a disconnect between the views of the bond market and the Federal Reserve.Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com2tag:blogger.com,1999:blog-1610137678303673471.post-42122746885544523522018-12-18T13:29:00.003-08:002018-12-18T13:29:36.042-08:00Active vs Passive: It’s Worse Than You Thought<br />
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S+P has been publishing since 2002 its’ SPIVA report which
compares the performance of actively managed funds as <a href="https://www.blogger.com/null" name="_GoBack"></a>compared
to their relevant indices. The results consistently show significant underperformance by actively
managed mutual funds over periods of 5, 10 and 15 years, the results across
virtually all categories of stock and bond funds particularly over longer time
frames is for the active funds to underperform.<o:p></o:p></div>
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Many investors are interested not only in their investment
returns but also the risk adjusted returns. <a href="https://us.spindices.com/indexology/core/spiva-through-a-risk-adjusted-lens" target="_blank">In a recent study</a> researchers at S+P
examined the risk adjusted returns of actively managed stock and bond funds vs
their relevant indices (for example large cap value funds vs the S+P500 value
index).<o:p></o:p></div>
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The study found that the overwhelming percentage of actively
managed stock funds underperformed their relevant indices over 5, 10, and 15-year
periods. Not surprisingly, fees played a significant role in determining the
underperformance. This can be seen in the tables below which show performance
gross and net of fees.<o:p></o:p></div>
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In the case of fixed income funds fees were the key
determinant of underperformance Bond funds in several categories outperformed
gross of fees but when adjusted for fees their performance was much poorer.<o:p></o:p></div>
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The study destroys another of the myths peddled by the
active fund management industry. The claim that indexing is “riskier” and that
active managers can successfully reduce risk in portfolios compared to indices
doesn’t stand up to scrutiny.<o:p></o:p></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1Yp7FY5EnFMO8pIiWMhnELFF12ptEuqz3ajqWD9JCFLFvVLzz0cV6Obw_Kd2crpMxL97QhzidYXWwrjIY4lFuNaNBQcLQMKVDXdcCY2g8MPTXPE9HAxkyUqZjyaA-EkoGdBj9x5uutCvR/s1600/spiv1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1000" data-original-width="1430" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1Yp7FY5EnFMO8pIiWMhnELFF12ptEuqz3ajqWD9JCFLFvVLzz0cV6Obw_Kd2crpMxL97QhzidYXWwrjIY4lFuNaNBQcLQMKVDXdcCY2g8MPTXPE9HAxkyUqZjyaA-EkoGdBj9x5uutCvR/s400/spiv1.jpg" width="400" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYo4M4KK2YGrmnXtU5rDsuKBwv3NZaoLaxhDi-j-ue0J7QhhorMy-bVJ1M8nFWG-8fhAzDPbVHYN07hGrH2KBT94K-cVkt598fFMD3wTtc1dr6u0qz5-gsQZQ_w64caibqfwy6nobzylxQ/s1600/spiv2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1497" data-original-width="1430" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYo4M4KK2YGrmnXtU5rDsuKBwv3NZaoLaxhDi-j-ue0J7QhhorMy-bVJ1M8nFWG-8fhAzDPbVHYN07hGrH2KBT94K-cVkt598fFMD3wTtc1dr6u0qz5-gsQZQ_w64caibqfwy6nobzylxQ/s400/spiv2.jpg" width="381" /></a></div>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-75212635551686843112018-08-29T18:19:00.000-07:002018-08-29T18:19:16.162-07:00Rebound in Non US MarketsEmerging markets and European markets suffered large declines in the last 3 months in response to a litany of perceived problems: Turkey's currency and debt crisis, potential for trade wars, and sharp declines in markets in Argentina and Mexico. As can be seen in the charts below the selloffs were marked by large increases in volume at the low points with an extreme spike in volume at the mid August low. This is typical of non US markets, particularly emerging markets where there is considerable performance chasing. All of these declines occurred as the US markets were hitting record highs.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2aR7hPob5UsuY9mMDl1hMAvMJhqD8JfkwMZeFvjgSrN_5K84TN3zZkbwN6ZcGvUzS40yHbVqKgiJZyfkmeS19B485p9WX1xz0ij0D82b0szYLlWKJmQ1IpML7O9a0PCtD7Hi5bG4CYPpD/s1600/fezytd.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="335" data-original-width="579" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2aR7hPob5UsuY9mMDl1hMAvMJhqD8JfkwMZeFvjgSrN_5K84TN3zZkbwN6ZcGvUzS40yHbVqKgiJZyfkmeS19B485p9WX1xz0ij0D82b0szYLlWKJmQ1IpML7O9a0PCtD7Hi5bG4CYPpD/s640/fezytd.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">FEZ (Europe) YTD performance...not volume spikes (bottom scale) at the lows</td></tr>
</tbody></table>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikSVJRqBSAF92sdcliwSetPyJBxYSu6kjvpLZ-opgMNny-zl24C8wQV56OrYxkyQeqaTG5f-4xAKXHlJqkgBP5sAtlBQhrv97cZG8WHH7tUM5ibRqsL0V_beBWQjs0Ikf42XSNcDbtW90B/s1600/iemg+ytd.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="335" data-original-width="579" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikSVJRqBSAF92sdcliwSetPyJBxYSu6kjvpLZ-opgMNny-zl24C8wQV56OrYxkyQeqaTG5f-4xAKXHlJqkgBP5sAtlBQhrv97cZG8WHH7tUM5ibRqsL0V_beBWQjs0Ikf42XSNcDbtW90B/s640/iemg+ytd.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">IEMG Emerging Markets (note volume spikes at market lows)</td></tr>
</tbody></table>
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The divergence in performance between emerging markets and the S+P 500 was the largest in over a decade.<br />
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Below is a 2 year chart of IEMG(emerging markets) FEZ(Europe) and SPY S+P 500 as can be seen the large divergence in performance between US and non US markets began in May as "headline risks" had impact on the markets.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOoHAkMlyvh52UpkCw0ZqI_7VOHEdRoq2yo4mcCssozkadIDwUzB42zrO7oCg3CBdJ_6pfiwEgyjQzNhhp4tqeqnjRbT4P83_S8xC0_5IEHT_5k7veJ5hz1kNNj2Rg_1zXBwaWaoM56U1X/s1600/all+3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="335" data-original-width="579" height="370" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOoHAkMlyvh52UpkCw0ZqI_7VOHEdRoq2yo4mcCssozkadIDwUzB42zrO7oCg3CBdJ_6pfiwEgyjQzNhhp4tqeqnjRbT4P83_S8xC0_5IEHT_5k7veJ5hz1kNNj2Rg_1zXBwaWaoM56U1X/s640/all+3.png" width="640" /></a></div>
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This divergence in performance has created large valuation gaps between US and non US markets:<br />
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<br />
<br />
p/e dividend yield<br />
<br />
<br />
IEMG emerging markets 13.81 2.66%<br />
FEZ Europe 15.09 3.16%<br />
SPY S+P 500 23.45 1.84%<br />
<br />
Perhaps in reaction to a bit of a fading of the concerns mentioned above and the large divergence in the valuation measures non US markets have has a sharp rebound in the last two weeks perhaps overlooked as US markets keep moving to new highs:<span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"> Most recently</span><a href="https://www.bespokepremium.com/think-big-blog/page/2/" style="-webkit-text-stroke-width: 0px; background-color: transparent; color: #0066cc; font-family: Times New Roman; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration: underline; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;" target="_blank"> Europe has shown more positive economic surprises than the US</a><span style="background-color: transparent; color: black; display: inline; float: none; font-family: "times new roman"; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;"> and there are signs Germany will step in to give financial assistance to Turkey.</span><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><br />
In the last 2 weeks IEMG has rallied 2.4% FEZ 3.8% vs. a rise of 2.1% for SPY. The non US ETFs are still negative for the year IEMG -6.2 and FEZ -1.4% far underperforming the SPY rise of 9.6%.<br />
Given the gaps in performance and valuation perhaps the recent moves are signs of closing of the performance gap between US and non US markets.<br />
<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com2tag:blogger.com,1999:blog-1610137678303673471.post-64306132213581477492018-08-28T01:48:00.000-07:002018-08-28T01:48:44.403-07:00High Yield Bonds in Your Portfolio ?High Yield bonds have proven to be an attractive addition to portfolios. They are not for the faint of heart however since they can be subject to large down years far in excess of those for investment grade. In fact, they have near zero correlation to Treasury bonds--not surprising since Treasury bonds benefit and high yield bonds take big losses during periods of extreme financial market uncertainty and the "flight to quality".<br />
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Their risk measures fall somewhere between stocks and treasury bonds and they have a relatively high correlation to US stocks. Nonetheless they show some attractive risk/return characteristics.<br />
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Ten Year data these include the worst year for high yield bonds in the last 20 years--2007 when high yield bonds fell 31%.<br />
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<tr><td class="tr-caption" style="text-align: center;">10 year returns Bond ETFs Hyg high yield gold vcit intermediate corporate green AGG aggregate US Bond (blue) VGIT Intermediate Corporate (Black)</td></tr>
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There is considerable reversion to the mean in spreads (differentials) between high yield and investment grade bond yields with periods of financial crisis leading to the flight to safety and sharp widening of yields--as can be seen in the extreme move during the 2007-2008 financial crisis. Current spreads are low reflecting confidence in the US economy and low perception of financial risk.<br />
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Investors looking to add high yield to their portfolios might consider a lower duration high yield bond ETF like SJNK which reduces duration risk=sensitivity to changes in interest rates. As can be seen below (SJNK short term high yield in green HYG intermediate term high yield in blue) during the last 2 years of rising rates short term has outperformed.<br />
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-8678216923949171192018-08-23T21:29:00.000-07:002018-08-24T06:58:51.229-07:00How is "Smart Beta/Factor Investing" Doing ? We now have over 5 years of data of live trading from the ishares "smart beta/factor" ETFS VLUE(Value), MTUM (momentum),QUAL (quality) and USMV (minimum volatility).<br />
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Momentum has shown the most outperformance vs the S+P 500. But all of the ETFs have shown impressive results VLUE and QUAL have also outperformed the S+P 500 (SPY) with little or no increase in volatility and USMV has performed very much in line with its target : slightly lower return than SPY with considerably lower volatility. It is not surprising that in a market dominated by momentum, value would outperform.<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdgz8qamqZMxi-0CrJ4oLLOi1O50e3CzInOPwv6xgnV8rCXWxPB7XoZ-5uyz9wzzX_IFHY569hDRXgcxkWhJTfVHWf3o1PgIpeAW97mFegVTQVK6Gyf-ueL_qz0YhMWOagg0IIngJSEe9k/s1600/smbet1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdgz8qamqZMxi-0CrJ4oLLOi1O50e3CzInOPwv6xgnV8rCXWxPB7XoZ-5uyz9wzzX_IFHY569hDRXgcxkWhJTfVHWf3o1PgIpeAW97mFegVTQVK6Gyf-ueL_qz0YhMWOagg0IIngJSEe9k/s400/smbet1.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">5 year return Mtum(black) qual(green) USMV(blue),Vlue(gold),SPY(S+P 500 red) </td></tr>
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An equal weighted portfolio of the smart beta ETFs outperformed the SPY.Although the volatility was higher the increased return was far in excess of the added volatility The portfolio generated "alpha" the most widely used measure of portfolio perfomance.<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ4iVSSqMwH6wBtowHPNXsENZW55K9psTK-TVfvUd03VwZT9hDuH5I-eJvhCS-1wIYmimHohFLGEnc58cMH-J64ho3cbPexQV5nT5uMThhZKqwfN37EFKuG71e942QMZGeoSuR23onP3YM/s1600/smport+2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ4iVSSqMwH6wBtowHPNXsENZW55K9psTK-TVfvUd03VwZT9hDuH5I-eJvhCS-1wIYmimHohFLGEnc58cMH-J64ho3cbPexQV5nT5uMThhZKqwfN37EFKuG71e942QMZGeoSuR23onP3YM/s400/smport+2.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">EQUAL WEIGH SMART BETA ETFS (green) S+P 500 (blue)</td></tr>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1v3yOSMvSfJYc5Tqd2eIFU8BWQSrCJvbKbbwIerKtr_f_8m5WhcpQaukDcwq8MFORInjFGYcU-hNhZKgWixaxeAHDTxX_rqFU4DUxvu51nsR9qSXW91ndFOyCeaHn1HQ24RnG4IV90ldK/s1600/smport.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="235" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1v3yOSMvSfJYc5Tqd2eIFU8BWQSrCJvbKbbwIerKtr_f_8m5WhcpQaukDcwq8MFORInjFGYcU-hNhZKgWixaxeAHDTxX_rqFU4DUxvu51nsR9qSXW91ndFOyCeaHn1HQ24RnG4IV90ldK/s400/smport.png" width="187" /></a></div>
Of course five years is too short a period to draw definitive conclusions and the results are someone skewed by the large outperformance of momentum during a massive bull market, yet the results are impressive.Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-68335599477408956442018-04-13T07:52:00.000-07:002018-04-13T07:52:03.887-07:00Unusual Times in the MarketsThis <a href="https://www.bloomberg.com/news/articles/2018-04-13/the-global-trading-map-looks-really-confusing-right-now" target="_blank">bloomberg article</a> entitled<br />
<h1 class="lede-text-only__hed" style="border: 0px; font-family: BWHaasHead-75Bold, Helvetica, Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: 1.1; margin: 0px 0px 20px; padding: 0px; position: relative; vertical-align: baseline;">
<span class="lede-text-only__highlight" style="background-color: white; border: 0px; box-shadow: rgb(255, 255, 255) 7px 0px 0px, rgb(255, 255, 255) -7px 0px 0px; font-family: inherit; font-stretch: inherit; font-variant: inherit; line-height: inherit; margin: 0px; padding: 3px 0px; vertical-align: baseline;"><span style="font-size: small;"><i>The Global Trading Map Looks Really Confusing Right Now</i></span></span></h1>
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explains several of them.<br />
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One stood out to me the volatility of emerging markets stocks is lower than that of developed markets (which is of course largely made up of the US).<br />
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com2tag:blogger.com,1999:blog-1610137678303673471.post-69807503027268701122018-04-09T23:03:00.000-07:002018-04-09T23:03:57.804-07:00Beware "Thematic" (trendy) ETFs<br />
One of the ETF strategies least likely to succeed is one based on a theme. A recent case in point is the eventshares Republican Policies ETF<br />
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According to the sponsors:<br />
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<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px;"><i>The EventShares Republican Policies Fund’s investment objective is to seek capital appreciation by investing in market segments that the Advisor believes will be impacted by the enactment of Republican Policies.</i></span><br />
<i><span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px;"><br /></span>
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px;">The fund gives:</span></i><br />
<i><span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px;"><br /></span>
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px; text-align: center;">Access to a diversified basket of companies and industries aimed to benefit from Republican Policies. The portfolio is rebalanced to maintain its tailored exposure around political narrative changes.</span></i><br />
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px; text-align: center;"><br /></span>
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px; text-align: center;">To say the least the "political narrative" of the current administrations political/economic policy is not exactly consistent. So its not surprising that the current focus towards trade policy has left the people at eventshares scrambling to respond.</span><br />
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px; text-align: center;"><br /></span>
<span style="background-color: white; color: #002841; font-family: "merriweather" , serif; font-size: 14px; text-align: center;">Bloomberg (v<a href="https://www.fa-mag.com/news/even-a-fund-tracking-trump-policies-is-looking-for-place-to-hide-37981.html?section=108&utm_source=Marketing&utm_campaign=0a43e5f137-ETFCHANN_FlexShares031718_MC&utm_medium=email&utm_term=0_b0050cea93-0a43e5f137-229797201" target="_blank">ia Financial Advisor Magazine)</a> Investment News)</span><br />
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<b><i>Confused by the Trump trade policies? You’re not alone.</i></b></div>
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<b><i>An ETF that’s designed to own stocks affected by Republican policies sees more risk than opportunity in the president’s tariff showdown with China and is taking cover -- just like most of the rest of the market....</i></b></div>
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The ETF hasnt exactly been attracting assets...it holds under $1 million</div>
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And if you think the Democrats will take over the House and be able to push their policies you can "flip" your trade and buy the eventshares Democratic Policy ETF.</div>
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No they are not offering an eventshares political stalemate ETF.</div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com4tag:blogger.com,1999:blog-1610137678303673471.post-29913066747739692072018-04-05T06:51:00.000-07:002018-04-05T06:51:50.891-07:00First Quarter 2018 Review<br />
<div class="MsoNormal">
<b>Market Review First Quarter 2018<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Both equity and bond markets showed negative performance for
the quarter. The bond market continued to show response to the Federal Reserve policy
of raising interest rates. Equities showed the impact of both higher interest
rates and uncertainty over future economic/political policies.<o:p></o:p></div>
<div class="MsoNormal">
<b>Equity markets</b>:<span style="mso-spacerun: yes;">
</span>Stock markets showed extreme volatility as market participants displayed
uncertainty towards future fundamentals. But just as important was the
consequence of the large concentration of the market increases in the past year
of a handful of stocks particularly those referred to as FAAMG (Facebook,
Apple, Amazon, Microsoft and Google. <o:p></o:p></div>
<div class="MsoNormal">
The concentration of this movement means that the S+P 500
has an extremely large weighting in these stocks. Furthermore, stocks in the
technology sector have also increased in weighting over the past years. The
large holdings in these stocks also come from holders of sector ETFs and
actively managed funds chasing performance. The consequence is that when there
is a selloff in these stocks there is a cascade of selling followed in turn by
momentum traders. <o:p></o:p></div>
<div class="MsoNormal">
Among these stocks Facebook and Amazon (and perhaps Google)
may face regulatory challenges that may justify some revaluation of their stock
value. Otherwise the overall earnings prospects for the technology sector
remains in place. <o:p></o:p></div>
<div class="MsoNormal">
The fundamentals of the US economy also <span style="mso-spacerun: yes;"> </span>remain in place. But the potential challenges
from poorly thought out trade policies hang over the market.<o:p></o:p></div>
<div class="MsoNormal">
In sum, greater volatility can be expected and further
declines in the market not unexpected particularly given the tendency of the
market to develop a momentum of its own.<o:p></o:p></div>
<div class="MsoNormal">
Among “smart beta” factors momentum continued to show
outperformance despite the selloff in technology in March. Value and Quality
showed strong relative performance in March.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Major US Market Indices<o:p></o:p></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 415px;">
<tbody>
<tr style="height: 15.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background: black; border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Symbol<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Category<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1Q 2018<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1 year<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3 year<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">SPY<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">SP 500<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-1.0%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">13.8%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">34.3%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Mtum<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Momentum<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.0%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">29.6%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">54.5%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Prf<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">US Large Value<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-2.7%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">9.8%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">27.4%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">QUAL <o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">US Quality<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">0.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">15.7%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">36.3%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td nowrap="" style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">USMV<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">US Minimum Volatility<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-1.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">10.8%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">32.9%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-right: none; border: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">VBR<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid black 1.0pt; border-left: none; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 111.0pt;" valign="bottom" width="148"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">US Small Value<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid black 1.0pt; border-left: none; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-2.1%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-bottom: solid black 1.0pt; border-left: none; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">8.3%<o:p></o:p></span></div>
</td>
<td nowrap="" style="border-left: none; border: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">25.5%<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>International Stocks<o:p></o:p></b></div>
<div class="MsoNormal">
Influenced less by changes in US bond markets Asian markets
continued their trend of outperformance vs.US stocks. Emerging markets and
particularly Asia based on current market conditions are attractively valued vs
the rest of the world…. but of course, the future of US Asian trade policy
makes forecasts difficult at best.<o:p></o:p></div>
<div class="MsoNormal">
The overall European Union stocks continued recent
outperformance vs the US. Changes in trade policy, albeit to a lesser extent
impact outlooks here as well. The European Central Bank has not moved to a
tightening mode which is a positive. Germany underperformed the overall
European Union likely due to domestic political developments. European stocks
have continued to perform the index of all deloped markets. Emerging Asia has
continued to outperform the rest of emerging markets.<o:p></o:p></div>
<div class="MsoNormal">
Major International Indices<o:p></o:p></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 436px;">
<tbody>
<tr style="height: 15.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background: black; border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Symbol<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Category<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1Q 2018<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1 year<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3 years<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">VWO <o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Total Emerging Markets<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">0.9%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">21.6%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">24.5%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">EFA <o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Total Developed Markets<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">14.9%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">18.0%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">GMF<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Emerging Asia<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.0%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">25.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">30.6%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">EZU<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">European Union<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.1%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">17.4%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">18.8%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5; mso-yfti-lastrow: yes;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">EWG<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 127.0pt;" valign="bottom" width="169"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Germany<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-3.0%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">13.8%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">12.4%<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>Bond Market<o:p></o:p></b></div>
<div class="MsoNormal">
The Federal Reserve raised interest rates for the fourth
time this year on March 21, the first time umder the new Fed Chairman Powell.
While it seems near certain further hikes will occur this year the pace is
uncertain much dependent on future data on inflation and the overall economy.
The yield on the ten-year Treasury bond hit 2.95% at the end of February the
high for 2018. It ended 2017 at 2.45%. At the end of the quarter it fell a bit
to 2.74%. Shorter term rates have risen as well in what is called a “flattening/flat
yield curve (narrowing of the differential between 2 years and 10-year interest
rates) the two-year treasury reached a high 0f 2.30% on March 19, up from 1.88%
at the end of 2017 and ended the quarter at 2.25%<o:p></o:p></div>
<div class="MsoNormal">
Even with this development in the yield curve the bond
allocation in portfolios benefitted from the strategy of keeping
maturities/duration short. Short term high yield continued to perform strongly
reflecting positive prospects for the economy.<o:p></o:p></div>
<div class="MsoNormal">
Major Bond Market Indices<o:p></o:p></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 501px;">
<tbody>
<tr style="height: 15.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="background: black; border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Symbol<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Category<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1Q 2018<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1 year<o:p></o:p></span></b></div>
</td>
<td nowrap="" style="background: black; border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3 years<o:p></o:p></span></b></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">AGG<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Aggregate US Bond Index<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-1.5%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.1%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.6%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">BSV<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Aggregate Short-Term Bonds<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.5%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">0.1%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.1%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">VCSH<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Short Term Corporate Bonds<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.7%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">0.7%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">4.4%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">vgsh<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Short Term Government Bonds<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">-0.1%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.0%<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5; mso-yfti-lastrow: yes;">
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 51.0pt;" valign="bottom" width="68"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">SJNK<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 176.0pt;" valign="bottom" width="235"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Short Term High Yield Bonds<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">0.2%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.7%<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 15.0pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: right;">
<span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">10.8%<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>Looking Forward<o:p></o:p></b></div>
<div class="MsoNormal">
As JP Morgan was famously said to have replied when asked
for his market forecast his response was “they will fluctuate”.<o:p></o:p></div>
<div class="MsoNormal">
It seems highly likely that those fluctuations will continue
to be above historical levels going forward. The concentration of holdings in a
few stocks and in the technology, sector will have an outside impact on
returns. The growth of momentum traders both institutional and individual (many
using ETFs) will be a short-term factor. More fundamental factors such as the
uncertainties over trade policy and future interest rate changes will affect
markets as well. A year of low single digits or negative returns should not
surprise investors given the outsize gains of recent years.<o:p></o:p></div>
<div class="MsoNormal">
Of course, the fundamental advice to investors is, as always
to be comfortable to the level of risk in their portfolio and to stay the
course. Given that short term fluctuations are best ignored.<o:p></o:p></div>
<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com3tag:blogger.com,1999:blog-1610137678303673471.post-23525081666520123942018-03-27T06:50:00.000-07:002018-03-27T06:51:04.244-07:00I'm Still Confused by Wealthfront's Direct Indexing and Tax Harvesting<br />
Robo advisor Wealthfront makes much of its strategy of direct indexing" purchasing individual stocks instead of broad ETFs which in turn allows more opportunities for tax loss harvesting as individual stocks fall..rather than only making exchanges between broad ETFs that have essentially the same index (total stock market ETFs ITOT and VTI for example).<br />
<br />
As <a href="https://research.wealthfront.com/whitepapers/tax-optimized-direct-indexing/" target="_blank">Wealthfront describes the strategy:(my bold)</a><br />
<br />
<h2 id="4-wealthfront-500" style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Source Sans Pro", Tahoma, sans-serif; font-size: 24px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; font-weight: 300; line-height: 28px; margin: 28px 0px 0px;">
<i>Wealthfront 100 (WF100), Wealthfront 500 (WF500), and the Wealthfront 1000 (WF1000)</i></h2>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i>We call the up to 100 individual stocks owned as part of our Direct Indexing service the <span style="box-sizing: border-box !important;">Wealthfront 100</span>. When Direct Indexing employs 500 or 1,000 individual stocks, we refer to that collection of stocks as the <span style="box-sizing: border-box !important;">Wealthfront 500</span>or the <span style="box-sizing: border-box !important;">Wealthfront 1000 </span>respectively.</i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i><br /></i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i>The individual stocks we buy are always selected to minimize tracking error with Vanguard’s Total Stock Market ETF, VTI, not based on their fundamentals or any perspective on whether they are fairly valued by the market. We harvest losses on individual stocks based on a threshold and use the proceeds to purchase other highly correlated stocks within the appropriate US stock index.</i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i><br /></i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i>I<b>n some cases, we may purchase more of an existing holding. For example, if Coca-Cola misses an earnings estimate and drops precipitously in value we would sell Coke and use the proceeds to buy more PepsiCo to maintain the correlation with VTI in the absence of Coca-Cola.</b></i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i><b><br /></b></i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
<i><b><br /></b></i></div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
The above may sound nice in theory but I am confused about how it would be implemented even in the case of Coca Cola and Pepsi other than that they make some competing soft drinks they are quite different companies with a large part of Pepsi's earnings from snack foods.</div>
<div style="background-color: white; box-sizing: inherit; color: #161338; font-family: "Calibre Regular", Helvetica, Arial, sans-serif; font-size: 14px; font-stretch: normal !important; font-variant-east-asian: normal !important; font-variant-numeric: normal !important; line-height: 18px;">
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But that is trivial compared to week the one the market had last week. Facebook, the second largest holding in the total stock market index</div>
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Here is Facebook stock over the last week (a 14% fall). It's hard to imagine how a strategy of direct indexing and daily (or even intraday) would work with Facebook. Which stock would reliably be chosen that had the same correlation with Facebook ?</div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-61177061788224211812018-03-23T07:36:00.000-07:002018-03-23T07:39:50.753-07:00No 2017 Was Not a Stock (or Bond) Pickers Market<br />
Standard and Poors quarterly publishes their SPIVA report comparing the performance of actively managed funds vs their indices. And despite the fact that the active managers eash year proclaim "it's a stock pickers' market..the numbers show otherwise.<br />
<br />
<a href="http://yehielgreni@gmail.com%3B/" target="_blank">From Investment News</a><br />
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<div style="color: #222222; font-family: Roboto, Arial, serif; line-height: 1.5; margin-bottom: 2em; margin-left: 6.2em; margin-right: 1em; padding: 0px;">
<span style="font-size: x-small;"><i>The S&P Indices Versus Active (<a href="https://us.spindices.com/spiva/#/" style="color: #b10816; font-weight: bold; text-decoration-line: none;" target="_blank">SPIVA</a>) report for 2017 shows growth fund managers improved markedly compared to their performance six months earlier. Over the one-year period, 63.08% of large-cap managers, 44.41% of mid-cap managers, and 47.70% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively.</i></span></div>
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<span style="font-size: x-small;"><i>That's the good news.</i></span></div>
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<span style="font-size: x-small;"><i>Over the past five years and the past 15 years, no more than 16% of managers in any category of actively managed U.S. mutual funds beat their respective benchmarks. In the longer term, the best records went to large-company value managers, who had a 29.56% success rate against their benchmark over the past 10 years and a 14.29% success rate in besting their bogies over the past 15 years.</i></span></div>
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<span style="font-size: x-small;">As for international stock funds:</span></div>
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<i><span style="font-size: x-small;">Only small-cap international funds beat their benchmarks over the past 12 months. The majority of managers in large-cap international funds and emerging markets funds lagged their benchmarks. And for any period longer than three years, most international funds lagged their indexes.</span></i><br />
<i><span style="font-size: x-small;"><br /></span></i>
<span style="font-size: x-small;">The SPIVA website is<a href="https://us.spindices.com/spiva/#/reports" target="_blank"> here </a>with much more data.</span></div>
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<span style="font-size: x-small;"><b>Interestingly composing a "smart beta" porfolio did perform well compared to the overal market. A portfolio equal weighted to momentum (mtum), quality (QUAL) minimum volatility (USMV) and value VLUE outperformed the S+P 500 25.2% vs 21.7% for the S+P 500.</b></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl4vCkakYSSZowkXE_YUa3YqKAirzqxIT_NAxJc_QGE6KUfvLtwJoldxYv4HWh7BMGBgRty9YUbUfBW41lWBtbsXC07pL39yS6CXE1gSojhVPGAVLcyR5A-2fvR88BmcrSV5kpayD73kJx/s1600/4+smaart.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl4vCkakYSSZowkXE_YUa3YqKAirzqxIT_NAxJc_QGE6KUfvLtwJoldxYv4HWh7BMGBgRty9YUbUfBW41lWBtbsXC07pL39yS6CXE1gSojhVPGAVLcyR5A-2fvR88BmcrSV5kpayD73kJx/s400/4+smaart.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">4 factor portfolio (green) S+P 500 Blue</td></tr>
</tbody></table>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYqxtacJb2A0vbdKRGmRKoWYeU-mVeCoaonGv-BrOto_yoZDzKcQknwMmmknv-AKIIv7FQSHeyvUoBcucTDRGEedIIyLXjMmIgDfR2L6aKTOyGCjO7dNo0qXHa4MK5RjwNqBFnSByAYLqm/s1600/4+smart+2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="500" data-original-width="235" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYqxtacJb2A0vbdKRGmRKoWYeU-mVeCoaonGv-BrOto_yoZDzKcQknwMmmknv-AKIIv7FQSHeyvUoBcucTDRGEedIIyLXjMmIgDfR2L6aKTOyGCjO7dNo0qXHa4MK5RjwNqBFnSByAYLqm/s320/4+smart+2.png" width="150" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">4 factor portfolio (green) S+P 500 Blue (total return top volatility bottom)</td></tr>
</tbody></table>
Over a 3 year period 2014 - 2017 the 4 factor portfolio outperformed the S+P 500 64.4% to 58.1%<br />
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<span style="background-color: white; font-family: "open sans" , "arial" , "helvetica" , sans-serif; font-size: 14px;"><i>Bond managers did not perform much better last year. The passive Barclay’s US Government/Credit Long index outperformed nearly 97 percent of active investment-grade long funds in 2017</i></span><br />
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<i><span style="font-size: x-small;"><br /></span></i></div>
Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-6749678380195488002018-03-21T10:45:00.001-07:002018-03-21T10:45:30.513-07:00Momentum ETF (MTUM) is not Full of FAANG (Facebook,Apple,Amazon, Netflix and Google)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxdNEF6B5AOvzYzuU5PvAcgLS7PaEG5qCrIZf8kwrvHJLd4pjE8LqxqcH1BkYrcZXKW9GUwW6ozT2wSfMy9Edpax5V8qN0HeHsIYdH2vYGwJ0jlXCxDp5Zs7FQJTIdHDDsCm0Wko-YqZJp/s1600/tr2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="235" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxdNEF6B5AOvzYzuU5PvAcgLS7PaEG5qCrIZf8kwrvHJLd4pjE8LqxqcH1BkYrcZXKW9GUwW6ozT2wSfMy9Edpax5V8qN0HeHsIYdH2vYGwJ0jlXCxDp5Zs7FQJTIdHDDsCm0Wko-YqZJp/s320/tr2.png" width="150" /></a></div>
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<span style="color: black; font-family: "times new roman" , serif; font-size: 13.5pt;">Because
of its name many may assume that the momentum ETF from Ishares (ticker) is top
heavy with technology stocks and in particular the FAANG stocks
(Facebook,Apple,Amazon,Netflix and Google.<o:p></o:p></span></div>
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<span style="color: black; font-family: "times new roman" , serif; font-size: 13.5pt;">In
fact tht is not the case. The methodology setting the components takes into
account volatility as well as upward price momentum. That is in contrast to cap weighted indices like the S+P 500 (SPY), Nasdaq (QQQ) and Technology indices (XLK) Although its largest sector
is technology(36%) It only includes one stock: Apple which has the lowest
p/e of the group.<o:p></o:p></span></div>
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<span style="color: black; font-family: "times new roman" , serif; font-size: 13.5pt;">Here
are the top 20 holdings in Mtum:<o:p></o:p></span></div>
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<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Name<o:p></o:p></span></b></div>
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<td style="background: black; border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in; width: 48.0pt;" width="64"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Weight (%)<o:p></o:p></span></b></div>
</td>
<td style="background: black; border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in; width: 118.0pt;" width="157"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<b><span style="color: white; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Sector<o:p></o:p></span></b></div>
</td>
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<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">JPMORGAN CHASE & CO<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">5.2<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Financials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">MICROSOFT CORP<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">5.2<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">APPLE INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">4.75<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">NVIDIA CORP<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">4.32<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">BANK OF AMERICA CORP<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">4.15<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Financials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">BOEING<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">4.05<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Industrials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 7;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">VISA INC CLASS A<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.59<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 8;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">UNITEDHEALTH GROUP INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.59<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Health Care<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 9;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">MASTERCARD INC CLASS A<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3.17<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 10;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">ABBVIE INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.91<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Health Care<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 11;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">CITIGROUP INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.74<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Financials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 12;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">MCDONALDS CORP<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.38<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Consumer Discretionary<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 13;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">HOME DEPOT INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.28<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Consumer Discretionary<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 14;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">3M<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.27<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Industrials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 15;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">ADOBE SYSTEM INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">2.07<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 16;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">PAYPAL HOLDINGS INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.99<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 17;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">ABBOTT LABORATORIES<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.63<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Health Care<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 18;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">CATERPILLAR INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.55<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Industrials<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 19;">
<td style="border-bottom: none; border-left: solid black 1.0pt; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">TEXAS INSTRUMENT INC<o:p></o:p></span></div>
</td>
<td style="border-top: solid black 1.0pt; border: none; height: 15.0pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.44<o:p></o:p></span></div>
</td>
<td style="border-bottom: none; border-left: none; border-right: solid black 1.0pt; border-top: solid black 1.0pt; height: 15.0pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 20; mso-yfti-lastrow: yes;">
<td style="border-right: none; border: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">MICRON TECHNOLOGY INC<o:p></o:p></span></div>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: none; border-top: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div align="right" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly; text-align: right;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">1.33<o:p></o:p></span></div>
</td>
<td style="border-left: none; border: solid black 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid black .5pt; mso-border-right-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0in 0in 0in 0in;"><div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-element-anchor-horizontal: column; mso-element-anchor-vertical: paragraph; mso-element-frame-hspace: 9.0pt; mso-element-top: .05pt; mso-element-wrap: around; mso-element: frame; mso-height-rule: exactly;">
<span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-bidi-language: HE; mso-fareast-font-family: "Times New Roman"; mso-hansi-font-family: Calibri;">Information Technology<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal">
<br clear="all" style="mso-special-character: line-break;" />
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: black; font-family: "times new roman" , serif; font-size: 13.5pt;">In
fact that is not the case. The methodology setting the components takes into
account volatility as well as upward price momentum Although its largest sector
is technology(36%) It only includes one stock of the FAANG among its top twenty holdings: Apple which has the lowest
p/e of the group.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Mtum actually includes a far smaller % of its holdings in
the FAANG stocks than the S+P 500 whose top holdings are below<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-QIFgHRSj3MMCTCGe9BgRL7Uax_n7pjUeBPmjTsdyuW6EfHWfHVD2XW_DKvOdLZLD_e_Sqrv1oKFtsJQ5vnzbaq3_fxTxYr4Bt49dCpe5TKj6GJlyMt7I89ZtQqmbiVMot3vPDdnOzxO5/s1600/spyy.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1070" data-original-width="1600" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-QIFgHRSj3MMCTCGe9BgRL7Uax_n7pjUeBPmjTsdyuW6EfHWfHVD2XW_DKvOdLZLD_e_Sqrv1oKFtsJQ5vnzbaq3_fxTxYr4Bt49dCpe5TKj6GJlyMt7I89ZtQqmbiVMot3vPDdnOzxO5/s400/spyy.jpg" width="400" /></a></div>
<div class="MsoNormal">
And not at all surprisingly the Nasdaq has an even higher
weighting of FAANG stocks which make up 37% of QQQ (Nasdaq 100 etf)<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
</div>
<div class="MsoNormal">
The technology ETF (XLK) has 31% of its holdings in FAANG ( and this despite the fact that Amazon and Netflix are
in consumer discretionary not technology).<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Because of this differential MTUM is far less sensitive to moves in the FAANG stocks..or to any single stock that loses price momentum.<br />
<br />
Mtum also puts a sell discipline on investors. As a stock loses upward price momentum it automatically comes out of the MTUM portfoilio<br />
On the other hand whether or not to sell one's exposure to the technology sector either by selling SPY and diversifying into other "smart beta" ETFs, or selling QQQ or XLK leaves the investor with a timing decision. And we know all the behavior pitfalls in market timing and buy/sell decisions. In fact MTUM is "on the opposite side" of the panic sellers since it automatically adjusts and rebalances to reduce holdings of stocks without positive price momentum</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As Facebook took its major drop of 7% on March 19 here is what MTUM,SPY,QQQ, and XLK have looked like since March 12 total return chart and bar chart of same data</div>
<div class="MsoNormal">
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEEcyJjGxbBUN2L4tbkUlNjlQwmQGsCqLUonn6uFutS0tvqDrXsuLg2rvOkVYc1kNc44yvdNcLN8KEzlowqvr-x8jfAfpx7ICIQpuCy9XdGR3CHIRw7uwNYhRzz5vN3L3rcTaq8tU-Ppwp/s1600/tr1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEEcyJjGxbBUN2L4tbkUlNjlQwmQGsCqLUonn6uFutS0tvqDrXsuLg2rvOkVYc1kNc44yvdNcLN8KEzlowqvr-x8jfAfpx7ICIQpuCy9XdGR3CHIRw7uwNYhRzz5vN3L3rcTaq8tU-Ppwp/s400/tr1.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">SPY(green) MTUM(Black), QQQ(gold) XLK (blue)<br />
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Total Return (top) Volatility (Bottom)<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwTOLbmlaXPA-a9J14SPR1EjFd23SpgY8-A8JaEWxrTtEi3D6LGN3qnqqUGbFzTkWcFuMR9XC8BB-llRE68e23mMf2cJF11-UbtPSr26H2BsUsZxbdUv_K5H8ygyN5QZFnXFL19K5EYglO/s1600/tr2.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="500" data-original-width="235" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwTOLbmlaXPA-a9J14SPR1EjFd23SpgY8-A8JaEWxrTtEi3D6LGN3qnqqUGbFzTkWcFuMR9XC8BB-llRE68e23mMf2cJF11-UbtPSr26H2BsUsZxbdUv_K5H8ygyN5QZFnXFL19K5EYglO/s400/tr2.png" width="187" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">SPY(green) MTUM(Black), QQQ(gold) XLK (blue)</td></tr>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-63985986964877474262018-03-21T10:40:00.002-07:002018-03-21T10:41:18.241-07:00Watch Your Duration..Update<br />
I <a href="http://sensibleinvestments.blogspot.co.il/2018/02/6040-portfolio-mind-duration.html" target="_blank">wrote a little more than a month ago </a>about the impact of duration on the traditional 60/40 stock bond allocation which often includes a total bond index like ETF BND as its bond allocation. With its 7 year duration it has a high price sensitivity to rising interest rates.<br />
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Alternatives to shorten the duration would include the Vanguard short term blend ETF(government and corporate bonds symbol BSV) or the ishares floating rate note ETF (ticker Flot)<br />
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Year to date returns might give a picture of how a 60/40 portfolio will perform with rising rates. All charts below compare the portfolios to 100% S+P 500<br />
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Returns YTD :<br />
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60/40 S+P 500/BND:+.3%<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVt5oMxoix_8__sotZtNOK3boKADXQXwUzUBXwbB4jZrluV6i8aqJnYlJUM892PWl6Aj4lfj7igfkzarEAfj-DAhjxhuaeh4syCPrGQeq_nGmgpsRh5VRz1YRG8AyLcypEsB7YrByq7dJm/s1600/flot.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVt5oMxoix_8__sotZtNOK3boKADXQXwUzUBXwbB4jZrluV6i8aqJnYlJUM892PWl6Aj4lfj7igfkzarEAfj-DAhjxhuaeh4syCPrGQeq_nGmgpsRh5VRz1YRG8AyLcypEsB7YrByq7dJm/s400/flot.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">100% S+P 500 (blue) 60% BND 40% S+P 500 (green)</td></tr>
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60/40 S+P 500/BSV +1.0%:</div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhopaFasoRl-QIbZnoomb6utOmDeP7b92oh1Lb7ztCVwRtGccT36URNacotbI0YYiT8uMAScGt5LPkUhTAD16DEFGNzNFtya5rnVB6yfHQcjNFwtNjYQs-pDTv9TGq4AqwW0PZ0dCzzfhbB/s1600/bsv.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhopaFasoRl-QIbZnoomb6utOmDeP7b92oh1Lb7ztCVwRtGccT36URNacotbI0YYiT8uMAScGt5LPkUhTAD16DEFGNzNFtya5rnVB6yfHQcjNFwtNjYQs-pDTv9TGq4AqwW0PZ0dCzzfhbB/s400/bsv.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">100% S+P 500 (Blue) 60% S+P 500/40% BSV (Green)</td></tr>
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<span style="font-size: 12.8px; text-align: justify;">60/40 S+P 500/FLOT + 1.5%:</span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5caAknWYEr8W_tzRu6O6pKRSS0g2iqEamubgsmhWTfEov1d7FeakGKL62-sdntRRNDQTYSxPXhPDpM6RbzBqJJDUWRxkDSI0dhFEnuYrlkZHMfdthC_2LakXKY6Go59TaTkh2xiqdrJT2/s1600/flot.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5caAknWYEr8W_tzRu6O6pKRSS0g2iqEamubgsmhWTfEov1d7FeakGKL62-sdntRRNDQTYSxPXhPDpM6RbzBqJJDUWRxkDSI0dhFEnuYrlkZHMfdthC_2LakXKY6Go59TaTkh2xiqdrJT2/s400/flot.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">100% S+P 500 (blue) 60% S+P 500/40% FLOT (Green)</td></tr>
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Apparently market participants have been making adjustments. Here is data for FLRN the State Street (SPDR) floating rate ETF which has $2.3 bln under management compared to the Ishares equivalent FLOT whch has $7.6 bln in assets<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi37LlmnPFds1URr5bVv5fCesLNaL2AdX1IblB7a39cEosCbDvbWLBiIsFajVft9bO3jJOvhENHnzzYEE8PjCH4rTfsuduEQIF22RWoByiRgrod7lFtaKfPUpY4uedR-I6VmLrF9mFnrohl/s1600/flot2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="421" data-original-width="541" height="311" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi37LlmnPFds1URr5bVv5fCesLNaL2AdX1IblB7a39cEosCbDvbWLBiIsFajVft9bO3jJOvhENHnzzYEE8PjCH4rTfsuduEQIF22RWoByiRgrod7lFtaKfPUpY4uedR-I6VmLrF9mFnrohl/s400/flot2.png" width="400" /></a></div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-29318516334872169612018-03-13T19:27:00.001-07:002018-03-14T03:34:35.585-07:00NFLX = Shooting Star Stock ?<br />
I have written several times about "shooting star' stocks. They usually produce a product that is well known to consumers ("everyone is buying it"), trades at a very high p/e which reflects extreme optimism for the future, and--because it has strong upward price movement--develops momentum which in turn creates further purchases. One small decline in the fast pace of earnings growth and the stock can fall to earth.<br />
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Most often these are small cap stocks making small growth stocks a particularly poor market sector in terms of risk return.<br />
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But it seems to me Netflix falls into this category. It is certainly a ubiquitous product and still has many international markets to join...and I am a member. But it seems its offerings of studio films is declining as they expand their "original content". Producing that original content" is expensive..and also extremely difficult to produce good content. And Netflix is going head to head with Amazon already. Disney is beginning its own streaming content..and Apple which already has movies for rent on itunes is eyeing this market.<br />
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Thוs Netflix with no particular comparative advantage in content,no unique technology and no huge base of consumers to cross sell its streaming service to . And Apple and Amazon have far deeper pockets than Netflix. Ironically the huge runup in Netflix market cap makes the prospect of acquisition by Apple or Amazon less likely than it might have been a year ago.<br />
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Here is a chart of Netflix vs Apple and the S+P 500 Netflix price gain of around 130% over the last 52 weeks. The netflix gain is so large it obscures the large outperformance of Apple vs the S+P 500. Nflx p/e is 225.8<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjmtpx_tAc8q2A6Wuu9Y3qxFCOde7nLtkpVD1dQ4sgBQ3RTh6yunT7m46lBxZ2q43MF9EykwRU-sJaQXBWCr0XrP7iktLxhzwMex1mHe_iCML6S7w2B0hkSMoTgDBriY1bPAxnWB4wp9XI/s1600/nflx.gif" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="335" data-original-width="579" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjmtpx_tAc8q2A6Wuu9Y3qxFCOde7nLtkpVD1dQ4sgBQ3RTh6yunT7m46lBxZ2q43MF9EykwRU-sJaQXBWCr0XrP7iktLxhzwMex1mHe_iCML6S7w2B0hkSMoTgDBriY1bPAxnWB4wp9XI/s400/nflx.gif" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Netflix (black) Apple (blue) S+P 500 (gold)<br />
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I certainly won,t mention a prediction of the future of Netflix stock. I would say that among the oft cited FANG stocks (Facebook, Apple,Netflix and Google) it has the least unique technology or dominance in its product sector.</div>
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Yet Apple trades at a p/e of 19, google at a p/e of 65(as noted above for netflix it is 225.8). Only Amazon is above netflix in valuation at 261. But of course Amazon is dominant in many business sectors and awash in cash. It can offer its streaming service for nothing as part of amazon prime because it drives so much business to its other products. Once you are on prime you order more,are more likely to buy an alexa or kindle etc.</div>
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Easy to see the risk in this shooting star falling back to earth. Although it has led market gains its market cap is sill small enough relative to the other fang stocks (and even less so after adding in stocks like Microsoft and a few others) the impact would likely not be extreme for the market.<br />
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Some opinions on NFLX in the WSJ <a href="https://blogs.wsj.com/moneybeat/2018/03/13/netflixs-massive-rally-draws-attention-of-skeptics/" target="_blank">here</a> <br />
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<span style="font-size: small;">Netflix’s Massive Rally Draws Attention of Skeptics</span></h1>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-31319375863381328792018-03-13T06:18:00.000-07:002018-03-13T06:18:23.929-07:00It's A Momentum Market<br />
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<b>3 Year total return:</b><br />
<b>Momentum (MTUM) 68.8%</b><br />
<b>S+P 500 (SPY) 44.8%</b><br />
<b>S+P 500 Equal Weighted (RSP)36.2%</b><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFsJnQb4o7toG017bZffSz9J1ejqclZY2zz1T8duIyJ9vLBkKZMu34VAPYc1yq5jofP-xl1nxDo8zkBJB66s5iSEo2uUfXsXc51z90qVdI3lUJUsbVZUHZg2FWjAHw0rEg2LyfF5fDbyb2/s1600/rsp1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="530" data-original-width="750" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFsJnQb4o7toG017bZffSz9J1ejqclZY2zz1T8duIyJ9vLBkKZMu34VAPYc1yq5jofP-xl1nxDo8zkBJB66s5iSEo2uUfXsXc51z90qVdI3lUJUsbVZUHZg2FWjAHw0rEg2LyfF5fDbyb2/s400/rsp1.png" width="400" /></a></td></tr>
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<b>Total Return MTUM (Green),SPY (blue),RSP (gold)</b></h2>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiw7TBbIDbmrpRnHJWsPobXgOrvpWvWzoheHkIBZlJYrvZEuTrfYQOKuNdIOR4Zja_mBI1xKLC-QQcjr42JCnuvCWfbhaX_KDYnjIe186waDBj_NQqV8nWkPKxVJOmwHmy9sepTlT_Aru2l/s1600/rsp+2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="235" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiw7TBbIDbmrpRnHJWsPobXgOrvpWvWzoheHkIBZlJYrvZEuTrfYQOKuNdIOR4Zja_mBI1xKLC-QQcjr42JCnuvCWfbhaX_KDYnjIe186waDBj_NQqV8nWkPKxVJOmwHmy9sepTlT_Aru2l/s400/rsp+2.png" width="187" /></a></div>
Total Return (top ) Volatility (bottom)Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-87234609447598499792018-03-08T12:44:00.001-08:002018-03-08T12:44:51.852-08:00What to Do About Currency Fluctuations and Your Portfolio ? Best Answer: NothingThe WSJ recently had a<a href="https://www.wsj.com/articles/the-smart-ways-for-fund-investors-to-deal-with-currency-fluctuations-1520219101?mod=searchresults&page=1&pos=10" target="_blank"> recent article </a>on investors and how they should react to currency fluctuations. The WSJ articles explains several ETFs that hedge portfolios against a weakening dollar but their core conclusion hits the right note:<br />
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<i>The dollar’s recent drop to a three-year low against other major currencies raises a natural question: How should investors in mutual funds and exchange-traded funds handle currency fluctuations?</i></div>
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<i>There are many options, including funds that allow investors to speculate on currencies’ short-term direction. But analysts say investors are best off with a plain-vanilla approach—having some exposure to foreign currencies through international stock and bond funds and just leaving it at that.</i></div>
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Having worked in the currency markets over a dozen years I can testify that currency movements are impossible to forecast. One of my responsibilities was to routinely take media calls asking to "explain" the market moves of the day. Of course they weren't looking for an answer that the movements of the day were pretty much random and there always was some "reason" an economic release or central bank announcement somewhere in the world, movements in other commodity or financial markets. But all of those factors could have been used to "explain" movements in the opposite direction.</div>
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I am reminded of a colleague who came home from work one day and her spouse asked her about the direction of the dollar. :"It's definitely going up,,she replied". Her husband responded" but two days ago you said it was definitely going down"..to which she answered"I changed my mind".</div>
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Given that currency movements are unpredictable and that unlike stocks in the long term: one cant count on the dollar to go up (or down) vs foreign currencies the best strategy is to take the positive diversification to both foreign economies and currencies by simply purchasing a foreign stock fund.<br />
As for the currency diversification..you get that in both a stock and bond fund,</div>
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Note that I wrote foreign stock fund..not foreign stock and bond fund. A foreign stock fund offers currency and stock exposure and the characteristics of stocks--long term unlimited upside and limited downside risk.</div>
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A bond offers limited upside--interest rates cant fall below zero so capital gain on bonds is limited-- but potential losses are far higher since interest rates could move up in double digits creating double digit losses. As we know from duration 3 percent rate increase on an international bond fund with a 7 year duration is a 21% decline in price. So one would need a 21% favorable currency movement to make up for the price decline of the bond in local currency terms...a huge move even in the volatile world of currency markets.</div>
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Furthermore, the bond allocation of a portfolio is supposed to offer the stable anchor..international bonds add more stability. Emerging market bonds add even more risk.</div>
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Although making market calls is fraught with pitfalls it does seem to me that purchasing etf IAGG an aggregate bond etf which has a duration of 7.3 years and a yield of .99% has a pretty more risk/return characteristics in terms of the prices of the bonds in the portfolio, As for currency risk..that can be taken through a foreign stock allocation.</div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com1tag:blogger.com,1999:blog-1610137678303673471.post-60022197092935628962018-03-05T12:42:00.003-08:002018-03-05T12:42:34.291-08:00Watching Duration An Interesting Chart<br />
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From Blackrock<br />
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<span style="background-color: white; color: #616161; font-family: AvenirNextRegular, Arial, sans-serif; font-size: 16px;"><i>The steady increase in shorter-maturity bond yields provides a thicker cushion against concerns around further rises in interest rates. The light green line in the chart above shows interest rates would need to jump more than one percentage point to wipe out a year of income in the two-year Treasury note. This is nearly double the cushion on offer two years ago – and far larger than the thin insulation provided by longer-term bonds today. We believe the short end offers relatively compelling income along with a healthy buffer against the prospects of further increases in yields.</i></span>Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-25327698569703805112018-02-28T04:01:00.004-08:002018-02-28T04:03:06.211-08:00Tax Reform: Good For Shareholders,,,As for the Rest of the Country..?<br />
As I (and I was most certainly not alone) it seems the vast majority of the cash coming back to the US because of tax changes will result most dramatically in an increase in stock buybacks and increased dividends. Economists may be divided on the impact in terms of new plants and equipment and jobs,,,but most of the the money is alreadt showing up in stock buybacks and dividends. This is definitely good for the stock market giving it a further support.<br />
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<a href="https://www.nytimes.com/2018/02/26/business/tax-cuts-share-buybacks-corporate.html?rref=collection%2Fsectioncollection%2Fbusiness" target="_blank">From the NYT</a> (my bolds)<br />
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<span style="font-size: x-small;">Tr<a href="https://www.nytimes.com/2018/02/26/business/tax-cuts-share-buybacks-corporate.html?rref=collection%2Fsectioncollection%2Fbusiness" target="_blank">ump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages</a></span></h1>
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<span style="font-size: x-small;"><i><span style="color: #333333; font-family: "georgia" , serif; font-size: 12.0pt;">President Trump promised that his tax cut would encourage
companies to invest in factories, workers and wages, setting off a spending
spree that would reinvigorate the American economy.<o:p></o:p></span></i></span></div>
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<span style="color: #333333; font-family: "georgia" , serif; font-size: 12.0pt;">Companies have announced plans for some of those
investments. But so far, companies are using much of the money for something
with a more narrow benefit: buying their own shares.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "georgia" , serif; font-size: 12.0pt;">Those so-called buybacks are good for shareholders,
including the senior executives who tend to be big owners price.<o:p></o:p></span></div>
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<div aria-label="tools" class="sharetools theme-classic sharetools-story-meta-footer " data-author="By MATT PHILLIPS" data-description="The maneuver is good for companies’ stock prices, but it may not help the overall economy — undercutting a central goal of the tax cuts." data-media="https://static01.nyt.com/images/2018/02/27/business/27BUYBACKS1/merlin_134537510_c7e9cdee-2f3b-447f-b024-118f4daa4e78-jumbo.jpg" data-publish-date="February 26, 2018" data-share-tools-initialized="1" data-shares="facebook,twitter,email,show-all,save" data-title="Trump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages" data-url="https://www.nytimes.com/2018/02/26/business/tax-cuts-share-buybacks-corporate.html" id="sharetools-story-meta-footer" role="group">
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<i>...in 2005, when a one-time tax holiday allowed companies to repatriate money on the cheap. That plan, championed by President George W. Bush, was sold as a way to get American companies to invest more in the domestic economy.</i></div>
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<i>Some $300 billion came back to the United States that year. But economists estimated that <a href="http://www.nber.org/papers/w15023.pdf" style="color: #326891;">as much as 92 percent</a> of it may have been paid out to companies’ shareholders — mostly in the form of buybacks.</i></div>
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<i>Studies have shown that the tax change lifted companies’ stock prices but did not expand their American work forces.</i></div>
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<i>Until the early 1980s, the practice of buying shares with corporate money was considered borderline illegal because it was thought to potentially open the company up to charges of manipulating share prices.</i></div>
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<i>But in 1982 the Securities and Exchange Commission adopted a rule that gave the green light to most share repurchases, as long as they followed certain rules.</i></div>
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<i>“We have some causal evidence that because of short-termism companies are doing some stock repurchases that maybe they shouldn’t do,” said Heitor Almeida, a professor of corporate finance at the University of Illinois at Urbana-Champaign. “And maybe that’s causing them to reduce investment.”</i></div>
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A version of this article appears in print on February 27, 2018, on Page B1 of the <span itemprop="printEdition">New York edition</span> with the headline: Tax </div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-84102560819162477782018-02-28T01:01:00.000-08:002018-02-28T01:01:57.944-08:00Endowments and Pension Funds...It Seems They Never Learn<br />
Many years ago I taught a course in a not for profit MBA program on investing for not for profits. In the course we examined the "Yale model" which was admired for impressive results by adding large amounts of alternative investments" such as venture capital and hedge funds. At the time I taught that most endowments --particularly those with smaller staffs than Yale --would be much better off with a simple indexing strategy. In fact in more recent years the Yale endowment's performance fell behind simple indexing.<br />
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Despite the fact that this "sophisticated strategy" of incorproating alternative investments proved more volatile, riskier, less liquid and more expensive..many endowments persist in following this strategy<br />
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I incorporated into the class a unit on "what happened to endowments in the 2008 financial crisis which highlighted the results for endowments during that period--the very types of markets where hedge fund investors claim they will outperform. Many endowments suffered large losses on their portfolios which included hedge funds and other alternative investments. Some of these were both leveraged and included derivatives connected to the real estate industry. Many of the endowments didn't really understand the investments but were no doubt impressed by the presentations of the managers and recommendations of their consultants . The consultants have an incentive to regularly bring in new "creative" strategies to justify their fees.<br />
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Not only did the endowments and pension funds find that they had large losses they found that they did not have liquid investments. Many of the funds they invested in had long "lock up" periods meaning the money could not be withdrawn at will. This led many of the endowments with the need to sell their more liquid and conservative investments to meet liquidity needs.<br />
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<strong>It seemed in recent years that some other major pension funds had soured on the high fees and middling results of hedge funds and moved most if not all of their portfolios to low cost indexing. Calpers the largest pension fund in the US. Already in 2015 it announced a move to indexing its massive portfolio. The Illinois state pension fund one of the largest in the country did the same as did other major pension funds</strong><br />
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<strong>The experts at some of the largest pension funds were moving to catch up with individual investors who were already moving large portions of their portfolios to indexing, But the trend is far less extensive than the massive movement of individual investors to passive investing.</strong><br />
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<span style="color: #4d4d4d; font-family: "helvetica" , "arial" , sans-serif; font-size: 14px;"><span style="background-color: white;"><br /></span></span><span style="color: #4d4d4d; font-family: "helvetica";">It seems that for many pensions and college endowments "they never learn". Every time there is a new "alternative investment" some of the endowments and pension funds become investors.. Often this is the result of recommendations of "expert consultants" or the slick presentations of Wall Street salespeople. Neither group has an incentive to recommend indexing..such a strategy would literally put them out of business.</span><br />
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<span style="color: #4d4d4d; font-family: "helvetica";">And the results are not surprising: some of these exotic investments will prove to be more volatile than conventional instruments and rather than the hedge funds providing some actual "hedge" against negative market movements...they magnify the losses.</span><br />
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<span style="color: #4d4d4d; font-family: "helvetica";">This time around the big movements in volatility based products and the huge losses on derivative products hit some pensions and endowments with big losses including Harvard (again !) and the state of Hawaii. I wont be surprised if we see more names added to the list.</span><br />
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<span style="color: #4d4d4d; font-family: "helvetica";"><a href="https://www.msn.com/en-us/money/markets/pensions-and-endowments-gambled-on-market-calm-then-everything-changed/ar-BBJ8FEk" target="_blank">WSJ</a> (<b>my bolds)</b></span><br />
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<strong>Pensions and Endowments Gambled on Market Calm, Then Everything Changed</strong><br />
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<em>More recently, some of these investors also made big, unpublicized wagers seeking to benefit from what had been an unusually long period of low volatility, according to pension-fund consultants and others who deal with these intuitions. The strategies, often involving the writing of complicated options contracts, were for years a source of easy money. Markets hadn’t been so calm since the 1950s.</em><br />
<em>Among those making such bets were Harvard University’s endowment, the Employees’ Retirement System of the State of Hawaii and the Illinois State Universities Retirement System.</em><br />
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<em>More recently, <b>the army of consulting firms that advise pension funds, such as Wilshire Consulting, has recommended some public-pension-fund clients write put contracts.</b> As recently as 2013, hardly any public pension funds used this strategy, according to Wilshire Consulting President Andrew Junkin. He estimated more than 60 of the nation’s more than 6,000 pension funds now do.</em><br />
<em>A growing number of Wall Street firms have been selling volatility-related strategies to pension funds and other big investors. Neuberger Berman’s U.S. Equity Index PutWrite Strategy sells puts on stock indexes. Part of the value of a put relates to the volatility of underlying stocks. By selling the puts, the fund aims to generate steady income in stable markets.</em><br />
<em>In a document prepared for an Illinois pension, the firm argued that behavioral biases in financial markets mean investors “ultimately overpay for protection.” The Neuberger Berman options products have attracted about $3 billion over the past two years.</em><br />
<em>But the strategy suffers losses when stocks fall. So far this month, the fund has lost 4.37%, through Feb 12, though that tops a loss of 4.52% for its benchmark, a mix of puts on stock indexes and compares with a 5.90% loss for the S&P 500 through that date.</em><br />
<em>The Neuberger Berman products have outperformed their benchmarks in recent years and the firm notes the price for the puts rises when markets tumble, making the fund a lower-risk way to invest in stocks</em><br />
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Given the large volume of trading in these instruments more and more endowments are taking it seems quite likely there will be more stories like this in the future.<br />
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And despite the fact that the massive money flow from active to passive investing by individual investors ..some were drawn to the short volatility trades because of thei large profits due to leverage...and suffered massive losses when things reversed,<br />
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And the <a href="https://www.nytimes.com/2018/02/22/business/college-endowments.html" target="_blank">NYT reports </a>that despite the moves by Calpers and some others there are still plenty of endowments allocating significant assets to "alternative investments" despite their dismal record compared to a basic index allocation:(my bolds)<br />
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<i>It’s official: Returns for college and university endowments for the 2017 fiscal year are in, and while they averaged a respectable 12.2 percent for the year, over the last decade they have underperformed funds offering a simple 60-40 or 70-30 stock-fixed income allocation.</i></div>
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<i><b>With their average returns dragged down by the weak performance of hedge funds, venture capital and private equity, </b>you would think endowments would be fleeing these so-called alternative investments, which are costly and mostly illiquid, as some large pension funds have done.</i></div>
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<i>On the contrary, <b>endowments are holding firm, or even adding to these holdings.</b> Last year, alternative investments accounted for an average of 52 percent of endowment assets — over 60 percent in the largest endowments — the same percentage as two years ago, according to the annual Nacubo-Commonfund study of endowments.....</i></div>
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<i><b>Five-year averages suggest the magnitude of the gap: The average endowment had annualized five-year returns of 5.9 percent. A 60-40 mix returned 8.2 percent, and a 70-30 mix returned 9.2.</b></i></div>
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Not surprisingly an official from Vanguard quoted in the article was puzzled (to say the least) at the persistence of he use of "alternatives".</div>
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The best explanation is that "hope springs eternal as an official of the Commonfund group that surveys endowments noted:</div>
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<i>We’re not seeing any changes in portfolio alignment or investment philosophy even though the indexes have clearly outperformed both managed funds and hedge funds. There’s still this belief that alternatives will provide some measure of outperformance.”</i></div>
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<i>He noted that endowments of more than $1 billion, which tend to have high allocations to alternatives, did on average outperform the 60-40 mix (but not the 70-30 mix) over the most recent five-year period.</i></div>
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<i>Jeff Schwartz, Markov’s president, agreed. “We<b>’re talking about true believers in the value of alternatives,” he said. Many endowment managers, he added, “aren’t completely objective.”</b></i></div>
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Among those strong unobjective believers include the managers of endowments at the largest endowments in the country at Ivy League Universities such as Harvard,Yale and Columbia. There may be much that is impressive about the level of the academics at those Universities. But individual investors would be much smarter investors if they keep it simple rather than following the lead of those investment managers.</div>
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<br />Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0tag:blogger.com,1999:blog-1610137678303673471.post-8029736302155708992018-02-27T13:29:00.002-08:002018-02-27T13:29:28.531-08:00Just Because This Advice Gets Endlessly Repeated Doesnt Make it Right<br />
Sure enough the two recommendations for investors are being proferred again despite the face that in up and down markets, volatile and less volatile these expensive strategies have a dismal record of outperforming indices.<br />
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Below are 2 "tips" that have a poor record of outperforming index instruments from <a href="https://www.nytimes.com/2018/02/16/your-money/stock-market-tips.html" target="_blank">a recent nyt article.</a><br />
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<a href="https://www.nytimes.com/2018/02/16/your-money/stock-market-tips.html?recid=110yJETJpaIlBwCEAlD3yijGb0o&sl_rec=editorial&contentCollection=smarter-living&mData=articles%255B%255D%3Dhttps%253A%252F%252Fwww.nytimes.com%252F2018%252F02%252F23%252Fwatching%252Fleaving-netflix-tv-shows-movies-march.html%253Frecid%253D110yJETJpaIlBwCEAlD3yijGb0o%2526sl_l%253D1%2526sl_rec%253Deditorial%26articles%255B%255D%3Dhttps%253A%252F%252Fwww.nytimes.com%252F2018%252F02%252F16%252Fyour-money%252Fstock-market-tips.html%253Frecid%253D110yJETJpaIlBwCEAlD3yijGb0o%2526sl_rec%253Deditorial&hp&action=click&pgtype=Homepage&clickSource=story-heading&module=smarterLiving-promo-region&region=smarterLiving-promo-region&WT.nav=smarterLiving-promo-region" target="_blank">5 Tips to Weather a Turbulent Stock Market</a></h1>
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<a class="byline-column-link" href="https://www.nytimes.com/column/wealth-matters" style="color: black; margin-right: 15px; text-decoration-line: none;">Wealth Matters</a></div>
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<span style="color: #333333; font-family: "georgia" , "times new roman" , "times" , serif; font-size: 1.0625rem;">.....<i>Pick individual winners.</i></span><i><span style="color: #333333; font-family: "georgia" , "times new roman" , "times" , serif; font-size: 1.0625rem;"> </span><span style="color: #333333; font-family: "georgia" , "times new roman" , "times" , serif; font-size: 1.0625rem;">With wild swings in the markets, active investment managers — those who buy and sell individual stocks instead of allocating money to an investment fund that tracks an index — say their skills are more in need now.</span></i></div>
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<i>They argue that stocks are going to begin to show differences and that their skills at stock selection will keep investors’ portfolios from being dragged down with an entire index. In other words, in a market where everything isn’t going up, selecting the best individual companies makes more sense.</i></div>
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....<i><span style="font-size: 1.0625rem; font-weight: 700;">Find alternative strategies.</span><span style="font-size: 1.0625rem;"> </span><span style="font-size: 1.0625rem;">Alternative investments are the province of investors who are willing to sacrifice access to their money for higher returns. But when markets were posting double-digit gains, they became less attractive.</span></i></div>
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<i>Hedge funds, in particular, earned a bad reputation for the high fees they charge to manage money on top of taking a share of any profits. Some sophisticated institutional managers, like the California Public Employees’ Retirement System, announced in 2014 that it was getting out of hedge funds because they were too expense and complex.</i></div>
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<i>But financial advisers and money managers are arguing that in a volatile investing environment, investors should reconsider hedge funds and other alternative assets like private equity, private debt and real estate. Their returns, they say, are less correlated to the fluctuations of the stock and bond markets and thus provide a steadying force.</i></div>
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Lawrence Weinmanhttp://www.blogger.com/profile/09432369616939155156noreply@blogger.com0