(PUB) Investing 2015

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The Independent Adviser for Vanguard Investors • December 2015 • 3 FOR CUSTOMER SERVICE, PLEASE CALL 800-211-7641
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uncle seems particularly optimistic that
the country will heal, and heal stron-
ger as a result of this most recent
tragedy. As he wrote me the day after,
quoting columnist Samuel Grafton,
“Democracy can be defined as ‘the
rule of the majority which protects the
rights of the minority.’ What’s wrong
with that?”
We can only hope that the “point of
life” will triumph over those who seek
some kind of satisfaction in death.
Stock markets in the U.S. were up
a bit more in November after a bullish
October, while Europe’s markets actu-
ally did better. Total Stock Market
Index gained 0.5%, while Europe’s
markets were up in November, with
the Stoxx 600 index gaining 2.7%.
However, the dollar’s strength turned
those gains into losses for U.S. inves-
tors, and European Index dropped
1.3%. Emerging markets lost more
ground, with EmergingMarkets Stock
Index down 3.2% for the month and
13.3% for the year. Bond yields moved
up a bit, and the 10-year Treasury lost
0.5%. Total Bond Market fell 0.3%
and is up just 0.7% for the year.
Money market yields continue to
stir. Admiral Treasury Money Market
picked itself up off the mat to score a
0.02% SEC yield on November 9—the
first time it’s been over 0.01% since
January 11, 2013. It ended the month
at 0.05%. But Vanguard’s tax-exempt
money funds all remain anchored
just above zero, and Money Market
Annuity, which is priced daily includ-
ing dividends, continues its free-fall,
down an annualized 0.16% over the past
five years.
PARIS FROM PAGE 1 >
As had been expected, the IMF
conferred reserve currency status
on China’s yuan, though this actu-
ally won’t take effect until sometime in
2016. The world didn’t fall apart on the
announcement, as some pundits sug-
gested it would. This greater status also
confers greater scrutiny on the currency
and those who try to manipulate it, and
should be a net positive for the world’s
economy going forward.
On another note, Vanguard has now
begun what it says will be a lengthy
transition to the new China A-shares-
inclusive benchmark for Emerging
Markets Stock Index. Apparently,
Vanguard doesn’t yet have permission
to buy all the A-shares they need to
make up the fund’s full 5.6% allo-
cation—the Chinese have only given
them a $1.6 billion allocation so far.
Vanguard says it expects to obtain the
necessary quota (about $2.8 billion) “in
due course.”
And, while you’re keeping an eye on
the distributions calendar (see page 6
for the details), also keep watch for the
slated introduction around December
7 of two new foreign stock funds,
International Dividend Appreciation
Index and International High
Dividend Yield Index , which Jeff and
I profiled in the October issue.
Finally, while we may see a rally
into the end of the year, it’s important
to recognize that 2015 could go down
in the books as a year that saw rather
meager returns in all the major market
segments, whether domestic or foreign
stocks, bonds or, as we are more than
used to by now, cash. That doesn’t mean
the bull market that began in 2009 has
lost its oomph. It simply confirms that
bull markets don’t go straight up. As
long-term investors, we can deal with
the year-to-year fluctuations, because
we know that, over the long haul, we
are going to make good money on our
investments with top-notch managers
running low-cost funds. Our Model
Portfolios continue to outperform, and
that’s great. If we have a year or two of
slow-to-no returns, so be it. The long
record that dates back almost 25 years
to when this newsletter first got started
shows we are doing just fine. n
Dow Performance After Major Events
Event Date 6 months later 1 year later
Attack on U.S.S. Cole in Yemen October 12, 2000 -2.8% -10.3%
9/11 Terrorist Attack September 11, 2001 10.5% -10.7%
America Strikes Back October 7, 2001 12.6% -18.6%
London Bombings July 7, 2005 7.2% 8.0%
Hurricane Katrina August 29, 2005 6.3% 9.4%
Iceland's Eyjafjallajokull Volcano March 21, 2010 0.2% 12.1%
Deepwater Horizon Explosion in Gulf of Mexico April 20, 2010 0.1% 12.3%
Japan Earthquake and Tsunami March 11, 2011 -8.3% 8.1%
S&P Downgrades U.S. Debt to AA+ August 5, 2011 12.8% 15.0%
Hurricane Sandy October 29, 2012 13.1% 19.6%
Boston Marathon Bombing April 15, 2013 2.0% 9.4%
U.S. Government Shutdown October 1, 2013 9.3% 12.6%
Russia Invades Crimea February 27, 2014 5.7% 11.9%
Charlie Hebdo Shooting January 7, 2015 2.3% ???
Paris Terrorist Attack November 13, 2015 ??? ???