Performance Tracking February 2017

For calculation methodology see this post.

The stock market was on an absolute tear in February with the S&P returning 3.9% in the month. At one point, the DOW was positive for 12 consecutive days, tying its record. The bench mark 60/40 portfolio returned a very respectable 2.6% for the month. My returns were respectable but not as well as these bench marks. Globally, international developed markets were the laggards. In my active portfolio, I have been raising cash as I reposition both fixed income and DGI stocks. Cash in active was at 15% at the end of the month. Even though I ratcheted up option activities, the drag on performance was significant. My YTD performance still compares favorably to the 60/40 benchmark owning to a strong January.

I exited positions in my employer’s stock as well as making changes in the DGI portfolio at considerable tax expense. I expect to run out of unrealized losses for tax-loss-harvesting purposes this year which is good news of sorts. I’ll have to do another one of those overall portfolio review posts when the dust settles down. In the mean time, there are two websites that track monthly returns that I find useful: by different asset classes and by different asset allocation strategies. In 2016, my portfolio was a hair ahead of the leader The Golden Butterfly, but YTD it’s decidedly middle-of-the-pack.

Plan and Forecast

The anticipated dip in Q1 did not materialize – I was expecting it to hit in January to early February. Instead the consolidation took the form of a prolonged sideways move that whipsawed traders. Realizing that, I changed my 529 allocation to 75/25 equities/bonds around end of January/early February and plan to maintain that until the end of 2018 according to my model. As the market relentlessly move upwards a large gap between it and the model prediction has opened up indicating higher likelihood of a correction. Make no mistake, such a correction needs to be bought with both hands. I maintain the prediction I first made in Nov 2016 for S&P 3400 in Q4’18.