Aug

17

Portfolio Review: July 2008

Teresa Lo @ 9:00 AM | | Start a Discussion 

If June 2008 capped a difficult quarter for equities, July was a tough month for portfolios with exposure to the deflating commodity bubble.

How bad was the damage? Boone Pickens was down 34%. Ken Heebner was down 18.97%. Vic Sperandeo’s S&P Commodity Trends Indicator was down 13.72% while his Diversified Trends Indicator was down 6.82%. Jim Rogers’ International Commodities Index was down 9.32%. The average portfolio manager took a beating.

Even though we had an inkling that the end was nigh, wearing the portfolio manager’s hat means we do not jettison entire asset classes overnight — that’s called trading. Diversification and frequent portfolio adjustments make us a moving target that is hard to hit but there are times when there is just no graceful way to exit a burning building.

Portfolio Performance

While the returns on our satellite portfolios were caught in the stampede, our typical client — one who allocates between the core and satellite portfolios — is making his way through 2008 in good form, well ahead of the usual benchmark indexes.

Outlook for August

It seems to me that the market could be at an important turning point, one where investors will begin to worry about return OF capital rather than return ON capital. To that end, our holdings in Treasury bonds may benefit tremendously from a peak in top-line inflation numbers as global economies tip toward the recessionary side of the scales:

Reference

Questions and Comments

Members: Please log in to join the discussion if you do not see the text box below.