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Stocks Had The First Decline In Six Weeks | Multi Asset Investments 8-26-2012

Top Stories Last Week

  • Stocks Had the First Decline in Six Weeks

U.S. stocks ended the week lower, the first weekly decline in six weeks. Trading volume was light and no significant economic news was released. The Dow Jones Industrial Average was down 0.7% and Standard & Poor's 500 Index (SPX) was off 0.5% from a week ago. MSCI EAFE index declined by 0.4% and MSCI Emerging Market index lost 1.0%.

  • Apple Became the Most Valuable Company in History

Apple set record for world's most valuable company at $621 billion in history on Monday in terms of market capitalization. The reason for the rise on Monday in the stock appeared to be rumors surrounding the release of iPhone 5. The previous record-holder was Microsoft which hit its all-time high on December 30, 1999 at the height of the internet bubble.

  • China's Manufacturing Sector Continued to Contract

HSBC's initial purchasing manager's Index for Chinese manufacturing fell to 47.8 from 49.3 in July. China has been hit particularly hard by the recession in Europe. The European sovereign debt crisis has also prompted severe austerity measures, which weakened demand in the euro zone, the largest market for Chinese exports. In addition, slow recovery in the US cut demand for Chinese exports.

  • UK's Double Dip Recession Continued

Britain's economy shrank less than first feared in the second quarter. GDP fell by 0.5%, which was in line with economists' expectations. However, the gross domestic product has been declining for three consecutive quarters in the country's second recession in four years.

  • US Housing Market Recovery Was Taking Hold

Sales of new homes in the US rose 3.6% in July to match a two-year high. Existing-home sales increased 2.3% in July from a month earlier to a seasonally adjusted annual rate of 4.47 million, the National Association of Realtors said Wednesday. The month's sales were 10.4% above the same month a year earlier. These are the latest signs of a steady recovery in the housing market.

Top Stories to Watch This Week

  • Bernanke / Draghi Will Speak at Jackson Hole

Fed Chairman Bernanke and ECB president Mario Draghi will speak at the central bank meeting held in Jackson Hole, Wyoming. Investors will try to get more hints on further quantitative easing.

  • US Consumer Confidence

The US consumer confidence, a gauge on US consumptions, is expected to improve slightly.

  • Samaras-Hollande Meeting

Greece Prime Minister, Samaras, will a meeting with French president, François Hollande, to discuss about the next Greece loan tranche of €31.5bn. Investors will watch carefully the progress of European crisis.

Weekly Performance Summary

The portfolios except the Concentrated Portfolio had positive performance last week as a result of the positive bond performance.

Table 1: ETF Performance

Asset Class Return     Last Week Return MTD Return YTD Return
Equities          
  SPY US Large Cap -0.47% 2.76% 13.84%
  IWM US Small Cap -1.19% 3.05% 10.36%
  EFA Developed Market Equity -0.38% 4.20% 7.64%
  VWO Emerging Market Equity -0.97% 2.35% 7.17%
Dividend Assets          
  IYR US REIT -0.05% -0.63% 16.46%
  AMJ US Energy Master Trust -2.57% -1.01% 2.92%
Commodities          
  GLD Gold 3.35% 3.50% 6.57%
  GSG Commodity -0.06% 5.77% 3.37%
Bonds          
  HYG US High Yield 0.67% 1.05% 7.30%
  AGG US Bond 0.53% -0.49% 2.99%
  TIP US Treasury Inflation Indexed Bond 1.29% -0.87% 4.81%
  IEF US Treasury Bond 1.05% -1.17% 3.30%
  TLT US Long Term Treasury Bond 2.64% -3.57% 4.59%
  SHY US Short Term Bond 0.07% -0.06% 0.18%
Click to enlarge

Table 2: Portfolio Performance

 

 

Portfolio Solutions Asset Allocation
(%Risk Asset
/%Bond)
WTD MTD
(1 day delay)
YTD
(1 day delay)
1-YR
(as of 12/11)
5-YR
(as of 12/11)
10-YR
(as of 12/11)
Aggressive 80/20 0.7% -0.3% 4.6% 12.4% 16.4% 16.1%
Moderate 60/40 0.8% -0.4% 3.8% 12.4% 14.8% 14.4%
Conservative 40/60 0.9% -0.5% 3.5% 12.5% 13.7% 12.8%
Defensive 20/80 0.9% -0.6% 4.1% 13.2% 12.5% 11.1%
Concentrated Portfolio Two ETFs -1.3% -0.8% 6.8% 12.1% 19.1% 19.3%
S&P 500 Index   -0.5% 2.8% 13.8% 2.0% -0.3% 2.9%
Barclays Bond Index   0.5% -0.5% 3.0% 10.3% 6.9% 5.8%
CPI Inflation         3.2% 2.3% 2.5%
Click to enlarge

For more information about the multi-asset investment strategies, please visit allseasoninvesting.com.

About ALL SEASON INVESTING: All Season Investing is an investment blog, created in December 2011 to offer investors insights and researches on how to implement a dynamic multi asset allocation strategy with the low-cost index funds or ETFs to achieve consistent returns while limiting downside risks through all stages of a market cycle.

Disclosure: I am long SPY, IWM, EFA, VWO, IYR, AMJ, GLD, GSG, HYG, JNK, AGG, TIP, IEF, TLT, VNQ.