We are firmly entrenched in a strong cyclical bull stock market both techincally and fundamentally. Earnings season has been good, the economy is getting stronger and cash flows continue out of bond funds and into equity funds. Stocks relative to cash favors owning stocks. Stocks vs. bonds favors stocks. Stocks vs. commodities favors stocks. Don't forget to check out the Cheat Sheet for my asset allocation and holdings.
However, Friday's negative market activity deserves mention and gives me an opportunity to discuss an important topic and one that will be a recurring theme in this blog. The 24 hour news cycle and the injustice it does to anything truly relevant in the world today. Well, that may be a bit harsh but just remember that the news channels compete for your attention the same way that MTV and TLC do. They do not necessarily have your best interests in mind and they certainly do not care about your portfolio. So, please don't let the chatter influence your financial decision making.
"The News" as it has come to be known over the years should really be called "The Noise" or to be generous "The Entertainment". So if you were paying attention to the news on Friday, you might have heard something like, "The Dow fell sharply amid concerns of unrest in Egypt today as protesters lined the streets..." and so on. Oh wait, did someone say there was political unrest in the middle east... stop the press!! My God, Chicken Little, the sky IS falling... turn that TV back on.
While this may have some importance on a social and political level, it should in the short term, have very little influence over your portfolio decisions. So don't get all worked up. I'll keep an eye on the potential ripple effects this could have on the markets, the same way I kept an eye on the Greece and Portugal noise that slightly affected a strong bull market a few months back. The fact of the matter is that the stock markets have closed higher for each of the previous NINE weeks. We are, technically, in an over bought stage (78% over bought) of this bull market and are due for a pullback. Hence, as I mentioned last week, I would not be buying anything here. If I owned it, I would hold it but if had pile of cash and was looking to jump in today, well I might go skiing this week and see how things unfold. It could just be that as soon as the "News" finds its next hot story we will have a nice entrance point to put some of your money back to work.
So here is the breakdown as of 1/30. We beat the S and P in week 1 by 23 basis points. You can always check out the portfolio's performance since 1/24/2011 relative to the S and P 500 at the Score Card tab.
| Holdings | | | | | | | | | |
| US Stock | Type | Ticker | Weight | Shares | Purchase Price | Total Starting Value | Current Price | Total Current Value | % Gain (Loss) |
| Cons. Disc. | Vanguard ETF | VCR | 10% | 165 | $60.50 | $9,983 | $59.79 | $9,865 | -1.17% |
| Real Estate | Vanguard ETF | VNQ | 10% | 180 | $55.50 | $9,990 | $56.42 | $10,156 | 1.66% |
| Materials | Vanguard ETF | VAW | 10% | 123 | $81.00 | $9,963 | $81.62 | $10,039 | 0.77% |
| Technology | Vanguard ETF | VGT | 10% | 158 | $63.25 | $9,994 | $63.52 | $10,036 | 0.43% |
| Small Cap | Vanguard ETF | VB | 20% | 279 | $72.25 | $20,158 | $72.59 | $20,253 | 0.47% |
| | | | | | | | | | |
| Iternational Stock | | | 30% | | | | | | |
| Emerging Markets | Vanguard ETF | VWO | 30% | 638 | $47.00 | $29,986 | $46.01 | $29,354 | -2.11% |
| | | | | | | | | | |
| Commodities | | | 10% | | | | | | |
| Gold | IShares ETF | GLD | 5% | 38 | $130.00 | $4,940 | $130.28 | $4,951 | 0.22% |
| Silver | IShares ETF | SLV | 5% | 188 | $26.50 | $4,982 | $27.30 | $5,132 | 3.02% |
| | | | | | | $99,995 | | $99,786 | -0.21% |
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