My ETF Portfolio: Say Hello to Deflation

The Model ETF portfolio's original description and list of holdings is here. All updates, like this one, are available here.

As of this update, the ETF portfolio and the S&P 500 are about even, each down almost 30%.

The best performer in the portfolio has been the Vanguard Total Bond Market ETF (BND). It has returned almost 2% since the portfolio was started in August.

The portfolio's inflation protected bond holding, IPE, did not pay dividends since October, although it is supposed to pay monthly. Say hello to deflation. The Consumer Price Index has been negative or zero since August.

If the current deflationary environment continues, BND will probably go up a little. Worried investors are driving long term bond yields lower almost each day.

click to enlarge

In the longer term, it's hard to see how we won't have major inflation. At that point, BND will probably fall sharply, while IPE will do well. The portfolio's commodities holding, RJI, should also do well when inflation reasserts itself. In the near term, however, it looks like it's going lower.

Dividends received and reinvested:

BND $0.296 * 6.7813 = $2 [75.84] 0.02637 more shares

BWX $0.122 * 17.3177953 = $2.1127710266 [50.26] 0.04203682902109 more shares

WIP $0.204 * 14.27516 = $2.91213264 [44.58] 0.067426085667979 more shares

Fresh $500 invested:

VEU $240 total 8.191126279863481 shares at 29.30 1972.66/44.371126279863481 = $44.458

RWO $100 total 4.460303300624442 shares at 22.42 1124.16/30.512502300624442 = $36.842602711643022

RJI $160 total 28.169014084507042 shares at 5.68 1481.92/151.308746084507042 = $9.794

SPY $500 total 5.686 shares at 87.93 12000/97.853 = $122.63

Comments

[granger:]

i enjoy your column, keep us updated, good stuff.

2008 Dec 14 12:26 PM