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Both of the funds that we recommended last week have had excellent gains. IBB, a biotech fund, has earned 4.43% in a week. FXI, a fund that tracks the Chinese stock market, has earned 6.35%. By comparison, the S&P 500 index is up 2.90%.
This week, we are going completely into cash. The coming week is so uncertain that the best course of action for now is to be in cash. Naturally, we will reevaluate the situation in a week.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk. This week, we are recommending a fund that follows biotechnology and pharmaceutical companies and another fund that follows large Chinese companies.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk.
As stocks are growing stronger, we are moving more money into them in our Balanced allocation. The Lifecycle 2030 fund, which we are recommending, currently keeps about 71% of its money in stocks. However, since the risk of stocks has increased slightly as well, in the Conservative allocation, we are actually putting a little bit more money into the money market. We are doing this by shifting more money into the Lifecycle Income fund.
Our highest return last week came from DPC, an international consumer discretionary stock fund. It has earned 3.0% in a week.
This week, we are recommending a fund of stocks from developed markets (excluding US) that have relative strength; an energy sector fund; a fund of US IPO’s; and, once again, a municipal bond fund.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk.
For the past two weeks, our ETF newsletter has been heavily invested in municipal bond ETF’s. I’ve received an email from a reader saying that his retirement account does not allow him to trade in muni funds.
I had hoped that, as a replacement, I could find a non-muni ETF that was highly correlated to muni ETF’s. Unfortunately, I have not found such a fund. For example, regular bond funds, such as AGG (iShares Barclays Aggregate Bond Fund), have been basically flat over the last three months, while muni funds have risen substantially.
My only advice then is to keep the portion of the account that would have been invested in a muni ETF in the money market. The downside of this is that the investor misses the gains from these funds. For example, in the past week, our largest gain came from AFB (AllianceBernstein National Municipal Income Fund).
Our ETF newsletter is off to a great start. In the past week, our Conservative allocation has made 1.3%, though our Balanced allocation did lose 0.4%. Our highest return last week came from AFB, a municipal bond fund that returned 1.7%. A large part of that return came from a dividend that was paid out on Wednesday.
Munis are continuing to do well. That is why for our Conservative allocation this week, all we are recommending are two municipal funds. For our Balanced allocation, we are also recommending a fund that tracks dividend-paying companies in developed markets outside of North America within the international consumer discretionary sector. This sector includes companies from the following industries: airlines, apparel, automobiles and parts, entertainment, food service, home builders, housewares, leisure time, lodging, office furnishings, retail, textiles and toys/games.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk.
Alex, these are very interesting and trying times. I’ve never seen anything like it before. As you mention in your website, we are limited in the TSP on how to invest our money, so we obviously need to do it as wisely as we can. I look forward to your thoughts and ideas.
I agreed on the F fund move last time. Will spread the word. Take care,
-P.
I appreciate the effort that has gone into producing your excellent website and free guidance for investors.
-L.M.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk.
Stocks have shown a lot of strength in recent weeks. Although broad-based stock index funds have lost over 30% in the past year, they’ve been in a steady uptrend since March. It is now safe to start putting some of our money into stocks. The materials sector has been especially strong, outperforming the broad-based indices. That’s why we’re putting some of our money into it. The rest of our money is going into municipal bonds, which are also doing very well.
We pick the mix of investments that maximizes the expected return while not exceeding a fixed maximum risk. In the past month, we have, once again, made a little money in bonds and the money market.
Stocks have shown a lot of strength in recent weeks. Although the stock funds have lost over 30% in the past year, they’ve been in a steady uptrend since March. It is now safe to start putting some of our money into stocks. That is why I am recommending the Lifecycle 2010 fund, which currently keeps about 29% of its money in the three stock funds.