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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 11
Many Tricks, but More Treats
AS BAD AS AUGUST AND SEPTEMBER WERE
for stocks, October was a treat, with the
S&P 500 index gaining 8.3% and the Dow up 8.5%.
Total Stock Market Index
gained
7.8%, its best monthly gain since October 2011’s 11.5% rise.
For all the ups and downs, Total Stock Market has only ground out a 1.8% gain for
the year to date.
Total International Stock Index
is off 1.0%, and
Total Bond Market
Index
is up 1.0%. 2015 could end up much like 2011, with little to show for all the day-
to-day action, unlike the prior three years, as the table on page 3 clearly illustrates.
Rate cuts were in the news abroad and those cuts, or the promise of them, drove mar-
kets sharply higher. First it was the head of the European Central Bank, Mario Draghi,
who suggested that further stimulus might be on tap as early as December. Then China
tacitly acknowledged that its economy needs more stimulus, and cut both lending rates
and bank reserve requirements in an effort to get more money into the hands of busi-
nesses and people, where it might spur some spending. China also abandoned its “one-
child” policy at month’s end in a bow to the reality that demographics are working
against its interests.
Here at home, the focus was on rate hikes. The Fed’s latest statement seemed clearer
on the potential for a December move, and traders are giving it 50-50 odds.
As I’ve said many times, whether the first hike comes in December or not, and
whether it’s followed by one or several additional increases, monetary policy remains
extremely accommodative. Businesses will have no trouble borrowing for expansion, and
The Independent Adviser for Vanguard Investors
and FFSA are completely independent of The Vanguard Group, Inc.
FUNDS FOCUS
> FOREIGN/GLOBAL
Casting a Wary Eye Overseas
SINCEYOU AND I
last took an all-encompassing look at Vanguard’s menu of foreign
funds, Tax-Managed International has been retired and
Global Minimum Volatility
has
been brought into the mix, which kind of makes sense. Vanguard already had too many
broad international index funds, so dropping the Tax-Managed fund was a no-brainer.
And Global Minimum Volatility adds a new low-cost, lower-risk wrinkle to what has
long been a rather staid line-up.
Still, as a group, Vanguard’s foreign fund offerings are rather basic, with a slew of
index funds and a handful of active funds offering access to developed and emerging
markets around the globe. Frontier markets haven’t made it onto Vanguard’s list, yet.
Normally I’d assume something’s in the works, but given how little money is invested
in frontier market funds and ETFs overall (on the order of a few billion dollars, and
DOW JONES INDUSTRIALS
October Close:
17663.54
STANDARD & POOR’S 500
October Close:
2079.36
4400
4650
4900
5150
5400
OSA J JMAM F JD N
NASDAQ COMPOSITE
October Close:
5053.75
0.00%
0.02%
0.04%
0.06%
0.08%
OSA J JMAM F JD N
3-MO.TREASURY BILLYIELD
October Close:
0.07%
1.6%
1.9%
2.2%
2.5%
2.8%
OSA J JMAM F JD N
10-YR.TREASURY NOTE YIELD
October Close:
2.15%
16000
16600
17200
17800
18400
OSA J JMAM F JD N
1900
1950
2000
2050
2100
2150
2200
OSA J JMAM F JD N
AVERAGEVANGUARD INVESTOR*
October:
4.9%
YTD:
0.9%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
OSAJ JMAMF JDN
*See the footnotes on page 2.
Funds Focus: Foreign/Global............................................. 1
Model Portfolios................................................................ 2
Tech Winter
: When Active Wins........................................ 4
No Inflated Returns........................................................... 6
Where’s the Diversification?............................................. 7
Performance Review.................................................... 8-11
Asset Allocation and Questionnaires.............................. 15
Dan’s Do-It-Now Action Recommendations.................... 16
NOVEMBER 2015
SEE
TREATS
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
FOCUS
PAGE 12