691 / 772
A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 8
Warming Trend?
WAS GLOBAL WARMING TO BLAME
for the GDP revision showing the U.S. economy
growing, rather than shrinking, during the first quarter? I doubt it, but according to the
Bureau of Economic Analysis, the economy continued its slow-growth, not no-growth
momentum in the year’s first three months. And in Washington, D.C., where hot air is a
fact of life, Janet Yellen’s Fed is warming to an interest-rate hike after all, despite the fact
that inflation hasn’t met its targets, whereas job creation and employment have.
U.S. investors warmed to stocks after selling in June. While July returns turned nega-
tive late in the month, a rebound yielded gains, with
Total Stock Market
up 1.6%. The
fund is up 3.5% for the year as well. For all their gyrations, though, stocks seem to be
caught in something of a trading range these days, as the market’s extremely low volatil-
ity and variability continues apace.
So far in 2015, after a big jump in February, the S&P 500 index has traded in a fairly
narrow band, between a low of 2040 and a high of 2130, or just 4.4%. Consider that in
2014 and 2013, the range between the index’s closing low and closing high was 20.0%
and 26.8%, respectively. Even in 2011, when the S&P 500 index was essentially flat,
dropping 0.04 points over the course of the year, the range from low to high was 24.1%.
So far, this has been an abnormally calm year.
Frankly, I’m disappointed that we haven’t been 10% below the market high since the
end of 2012 (and that wasn’t for long). Why my bearish sentiment? Because I’d like our
chosen managers to catch a break—or better yet, catch some bargains. I know that out
The Independent Adviser for Vanguard Investors
and FFSA are completely independent of The Vanguard Group, Inc.
OVERSEAS
Sending Your Greenbacks Offshore
YOU CAN BE EXCUSED (
temporarily, anyway) if you think investing some of your hard-
earned money overseas is a really, really bad idea.
Heck, between Greece and China alone, the headlines have been filled with the eco-
nomic travails, poor regulatory and governmental leadership and, yes, volatile stock
prices that seem to characterize overseas markets. (Of course, we never fall victim to any
of those things over here, do we? Wink, wink.)
Well, I’m going to make the case that you absolutely should invest some money out-
side the U.S. I won’t go so far as Vanguard does, with its one-size-fits-all “40% of your
equity allocation” rule on foreign investments. I will, however, tell those of you who
didn’t follow my lead and add to
International Growth
in late March that this is as
good a time as any to take some of your winnings from some domestic funds and do
DOW JONES INDUSTRIALS
July Close:
17689.86
STANDARD & POOR’S 500
July Close:
2103.84
4200
4500
4800
5100
5400
J JMAM F JD NOS A
NASDAQ COMPOSITE
July Close:
5128.28
0.00%
0.02%
0.04%
0.06%
J JMAM F JD NOS A
3-MO.TREASURY BILLYIELD
July Close:
0.06%
1.6%
2.0%
2.4%
2.8%
3.2%
J JMAM F JD NOS A
10-YR.TREASURY NOTE YIELD
July Close:
2.20%
16000
16600
17200
17800
18400
J JMAM F JD NOS A
1800
1900
2000
2100
2200
J JMAM F JD NOS A
AVERAGEVANGUARD INVESTOR*
July:
0.9%
YTD:
2.5%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
J JMAMF JDNOSA
*See the footnotes on page 2.
Sending Your Greenbacks Offshore.................................. 1
Model Portfolios................................................................ 2
Moving the Goal Line........................................................ 5
Jack Bogle Changes His Tune........................................... 7
Performance Review.................................................... 8-11
Bonds 101: Balancing Trade-Offs..................................... 12
Dan’s Do-It-Now Action Recommendations.................... 16
AUGUST 2015
SEE
WARMING
PAGE 3
>
S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E
>
SEE
OFFSHORE
PAGE 4