May 2016 PDF

Q1 Blues, Ver. 3.0

After a rough start to 2016, a relative calm seems to have settled over Wall Street. Volatility is down; stocks are up; and high yield is back in favor. Meanwhile, the first-quarter GDP report raised investor anxiety, showing that economic growth was extremely light for the third year in a row, at 0.5% growth. Would I like to see stronger economic growth? Absolutely. Do I think the current slowdown warrants panic? Not at all.

In any case, if you missed last week's Hotline, we made a trade in two of our Model Portfolios. Jeff and I have a recap of the trade and a full explanation of our reasoning for you in the issue. Of course, some of you may be sitting on some hefty long-term gains, so please feel free to check with your tax adviser about the tax implications. But when it comes to taxes, please don't make the mistake of making tax efficiency your primary goal in investing. What really matters is after-tax returns. Of course, that's just one of several things Vanguard probably won't tell you–the advice you'll get from them is generally dumbed down to the point of being useless. More on both of those topics, plus a reader question about the equity allocations in our Model Portfolios, in the issue. Read More »

April 28, 2016

Selling Selected Value

I've got changes recommended for two of our Model Portfolios, which I detail in this week's Hotline. Despite today's decline, a relative calm seems to have settled over Wall Street of late. Volatility is down, stocks are up, and high yield is back in favor. Since quarter-end, the VIX, a gauge of investor anxiety, has fallen, and its year-to-date average is below its long-term average—if it sticks, this will be the fifth year in a row of below-average volatility. Earlier today, the Dow and S&P 500 indexes were trading within 1.5% and 1.7% of their all-time highs, respectively. Add in dividends, and the Dow has hit five all-time highs this month. 500 Index hit an all-time high last week. It's down just 0.3% from that high as of Wednesday night. And High-Yield Corporate is up 2.2% this month, putting it up 4.5% on the year. Compare that to Total Bond Market Index's 0.1% gain for April and its 3.2% rise on the year. Read More »

March 10, 2016

Vanguard Expense Ratios Rise on 52 Funds

Vanguard's been making a lot of hay lately with news that its expense ratios continue to decline. But it's all a matter of how and when you choose to measure them. With the release of its December 2015 annual reports, fully 52 Vanguard funds (counting separate Investor, Admiral, ETF and Institutional share classes) saw their expenses RISE rather than fall over the past 6 months. Read More »

Most Recent Forum Threads
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Re: Update X-rays of Dan's Model Portfolios

butwait (05-04-2016) wrote: Morningstar is introducing a new sector structure that is more logical, allows for intelligent diversification, and makes it easier to understand the decisions being made by portfolio managers. It divides the stock universe into three major economic spheres or Super Sectors, Cyclical, Defensive and Sensitive. Within each of these Super... Read More »


Re: Update X-rays of Dan's Model Portfolios

griffim (05-04-2016) wrote: What does "sensitive" mean in the model funds listing? I notice that Dan's Income fund has one of the higher clusters of sensitive stocks sectors. What is the implication? Griffim Read More »


Re: International Funds

butwait (05-04-2016) wrote: Reasons You Should Invest Internationally Published: Apr 22, 2015 6:07 p.m. ET Most investors can probably achieve their goals without venturing beyond U.S. stocks. The author recommendations having half your equity investments in international funds. What gives? When you examine the long-term (up to 87 years of data) returns from these asset classes, you... Read More »

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"America's leading expert on investing in Vanguard funds"

Daniel P. Wiener is editor of The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds. Through his newsletter and guide book, Dan helps tens of thousands of Vanguard investors choose wisely among more than 100 Vanguard mutual funds. The Adviser is a five-time winner of the Newsletter Publishers Foundation's Editorial Excellence Award. View More »

Vanguard Funds Correlation
What's This?
Model Portfolio Performance
Models April YTD
Growth 1.1% 0.5%
Conservative Growth 1.1% 0.9%
Income 0.8% 1.7%
Growth Index 0.7% 2.7%
The average
Vanguard investor
0.9% 1.8%
Past Performance »