MODEL PORTFOLIO 2009
General Comments
Despite the market turmoil in 2008, the portfolio changes for 2009 are relatively minor. Allocations in stocks and inflation-protected bonds have increased somewhat. In my view, the long-term macroeconomic outlook still favors inflation, as U.S. debt of government, households, and businesses continued to grow relative to GDP. While household borrowing slowed considerably, the federal government stepped in to pick up the slack. The portfolio remains conservative, and positioned to benefit from weakness in the dollar and rising inflation.
Portfolio to Begin 2009
Vanguard Inflation-Protected Securities Fund 21%
Fidelity Select Gold Fund 15%
T. Rowe Price U.S. Treasury Money Fund 14%
Prudent Global Income Fund 9.5%
T. Rowe Price International Stock Fund 9%
Prudent Bear Fund 7.5%
T. Rowe Price International Bond Fund 7%
T. Rowe Price Japan Fund 5%
T. Rowe Price Total Equity Market Index Fund 5%
Fidelity Mega Cap Stock Fund 5%
T. Rowe Price New Asia Fund 2%
(Updated 1/5/2009)
MODEL PORTFOLIO 2008
General Comments
The portfolio for 2008 is nearly the same as 2007, because the fundamental outlook is essentially unchanged. The current account deficit shrank a bit, to about 5.2% of GDP in 2007. Domestic debt (government, households, and business) as a percentage of GDP has expanded very rapidly in the past two years. So the portfolio remains conservative, and positioned to benefit from weakness in the dollar. The most significant change is the shift of the Fidelity Large Cap Growth segment to the Fidelity Mega Cap Stock Fund.
Portfolio to Begin 2008
T. Rowe Price U.S. Treasury Money Fund 20.5%
Vanguard Inflation-Protected Securities Fund 16.5%
Fidelity Select Gold Fund 13.5%
Prudent Global Income Fund 10%
Prudent Bear Fund 8.5%
T. Rowe Price International Bond Fund 7%
T. Rowe Price International Stock Fund 6%
T. Rowe Price Short-Term
Bond Fund 5%
T. Rowe Price Japan Fund 4.5%
T. Rowe Price Total Equity Market Index Fund 3.5%
Fidelity Mega Cap Stock Fund 3.5%
T. Rowe Price New Asia Fund 1.5%
(Updated 1/4/2008)
RESULTS FOR 2008
The model portfolio posted a return of negative 8.3% for 2008. The only significant gainer was the Prudent Bear Fund (up 26.85%). The Select Gold Fund (down 20.5%) and the Japan Fund (down 31.4%) outperformed their benchmarks. The New Asia Fund (down 61.0%) underperformed after a strong year in 2007. Information of this sort can be found at morningstar.com.
Both the International Bond Fund (up 1.8%) and the Prudent Global Income Fund (up 0.3%) posted positive returns despite the dollar's gain of about 8% vs. other major currencies.
Other results were as follows:
U.S. Treasury Money up 1.5%
Short-Term Bond up 1.2%
Inflation-Protected Securities down 2.85%
Total Equity Market Index down 37.2%
Mega Cap Stock down 39.4%
International Stock down 48.0%
MODEL PORTFOLIO 2007
General Comments
The portfolio for 2007 is little changed from 2006, because the fundamental outlook is essentially the same. The current account deficit continued to expand, to about 6.3% of GDP in 2006. The rate of growth of domestic debt last year far outstripped economic growth. So the portfolio remains conservative, and positioned to benefit from weakness in the dollar. The most significant change is the shift of the Fidelity Select Environmental segment to the Fidelity Large Cap Growth Fund, a sector which has lagged the overall market over the past five years.
Portfolio to Begin 2007
T. Rowe Price U.S. Treasury Money Fund 21%
Vanguard Inflation-Protected Securities Fund 15.5%
Fidelity Select Gold Fund 12.5%
Prudent Global Income Fund 10.5%
Prudent Bear Fund 8.5%
T. Rowe Price International Bond Fund 7.5%
T. Rowe Price International Stock Fund 6%
T. Rowe Price Short-Term
Bond Fund 5%
T. Rowe Price Japan Fund 4%
T. Rowe Price Total Equity Market Index Fund 3.5%
Fidelity Large Cap Growth Fund 3.5%
T. Rowe Price New Asia Fund 2.5%
(Updated 1/24/2007)
RESULTS FOR 2007
The model portfolio posted a return of 11.6% for 2007. Top gainers were the New Asia Fund (up 66.4%) and the Select Gold Fund (up 24.9%). The only negative return was that of the Japan Fund (down 5.5%); however, the fund outperformed its category for the year. Information of this sort can be found at morningstar.com.
The Total Equity Market Index Fund returned 5.25%. Both the Prudent Global Income Fund and the Prudent Bear Fund performed well. The Global Income Fund gained 10.7% as the dollar fell 10% versus other major currencies in 2007. The Prudent Bear Fund gained 13.4% despite a middling year for the U.S. stock market. The Fidelity Large Cap Growth Fund returned only 2.1%, underperforming its category by more than 11%.
Other results were as follows:
International Stock up 13.4%
Inflation-Protected Securities up 11.6%
International Bond up 10.05%
Short-Term Bond up 5.5%
U.S. Treasury Money up 4.2%
MODEL PORTFOLIO 2006
General Comments
The portfolio for 2006 is nearly unchanged from 2005, because the fundamental outlook is essentially the same. The current account deficit has again ballooned, to 6% of GDP. The rate of growth of domestic debt last year far outstripped economic growth. So the portfolio remains conservative, and positioned to benefit from weakness in the dollar.
Portfolio to Begin 2006
T. Rowe Price U.S. Treasury Money Fund 21%
Vanguard Inflation-Protected Securities Fund 14%
Fidelity Select Gold Fund 12.5%
Prudent Global Income Fund 10.5%
Prudent Bear Fund 8%
T. Rowe Price International Stock Fund 7.5%
T. Rowe Price International Bond Fund 7.5%
T. Rowe Price Short-Term Bond Fund 5%
T. Rowe Price Total Equity Market Index Fund 4%
T. Rowe Price Japan Fund 3.5%
Fidelity Select Environmental Fund 3.5%
T. Rowe Price New Asia Fund 3%
(Updated 1/9/2006)
RESULTS FOR 2006
The model portfolio posted a return of 10.2% for 2006. Top gainers were the New Asia Fund (up 36.1%), the Select Gold Fund (up 25.4%), and the International Stock Fund (up 19.3%). However, the Select Gold Fund and International Stock Fund lagged their indices for the year. Information of this sort can be found at morningstar.com.
The Total Equity Market Index Fund returned 15.5%. Both the Prudent Global Income Fund and the Prudent Bear Fund performed well. The Global Income Fund gained 11.5% as its exposure to the Euro helped performance. The dollar fell 10% versus the Euro in 2006 but rose slightly versus the yen. The Prudent Bear Fund gained 9.1% despite the uptrend in the U.S. stock market.
Other results were as follows:
Select Environmental up 10.5%
International Bond up 7.55%
Short-Term Bond up 4.4%
U.S. Treasury Money up 4.3%
Inflation-Protected Securities up 0.4%
Japan down 5.7%
MODEL PORTFOLIO 2005
General Comments
For my macroeconomic view, see the discussion for 2004.
The current investment situation might be described as bipolar. Corporate profits grew briskly as the squeeze on workers that began in 2001 continued. One might say that the stock market is "fairly valued" given consensus 2005 profit estimates of about $74 per share for the S&P 500. However, the U.S. financial environment became more unstable in 2004, with overall debt as a percentage of GDP growing to 199.8% at the end of the third quarter, from 196.8% a year earlier. The current account deficit soared to over $600 billion for the year. The model portfolio has undergone only small changes from 2004. Exposure to U.S. stocks remains limited, and the portfolio is positioned to gain from a falling dollar. It should be noted that the portfolio has been developed without regard for tax considerations.
(Updated 1/4/2005)
Portfolio to Begin 2005
T. Rowe Price U.S. Treasury Money Fund 20%
Vanguard Inflation-Protected Securities Fund 14%
Fidelity Select Gold Fund 12%
Prudent Global Income Fund 10%
Prudent Bear Fund 9.5%
T. Rowe Price International Stock Fund 7%
T. Rowe Price International Bond Fund 6.5%
T. Rowe Price Short-Term Bond Fund 6%
T. Rowe Price Japan Fund 4.5%
T. Rowe Price Total Equity Market Index Fund 4%
Fidelity Select Environmental Fund 3.5%
T. Rowe Price New Asia Fund 3%
(Updated 1/4/2005)
Results for 2005
The portfolio return for 2005 was 9.36%, buoyed by a strong second half. For comparison, the total return of the S&P 500 was about 5%.
Leading gainers were the Fidelity Select Gold Fund and the Price Japan Fund, both up slightly more than 40%. Both funds outperformed their peer groups. Other big gainers were the Price New Asia Fund (up 26%) and the Price International Stock Fund (up 16%). The Fidelity Select Environmental Fund rose 9%.
The dollar gained about 8% versus other major currencies in 2005, leading to losses in two funds, the Prudent Global Income Fund (down 4%) and the Price International Bond Fund (down 8%). Interestingly, the price of gold bullion climbed about 18% despite the dollar's rise.
First Half Results for 2005
Through June 30, the model portfolio lost 1.1% -- just about the same as the S&P 500, and not a bad result given that the dollar strengthened by about 7.5% versus other major currencies. The top performer was the New Asia Fund, up 6.1%. Decliners included the Prudent Global Income Fund (down 6.7%) and the Price International Bond Fund (down 5.7%). The Fidelity Select Gold Fund declined 4.6%, a reasonable performance given that the Philadelphia Gold & Silver Index (XAU) slipped 6.4% during the period. All three of these funds were hurt by the rising dollar. (Incidentally, the Vanguard Precious Metals & Mining Fund, which is diversified among metal and mining stocks, rose 5.6%.) All other segments of the portfolio moved less than 3%.
In my view, the dollar's appreciation in the first half is not supported by the fundamentals. Federal Reserve data show that domestic debt (of the government, households, and business) continued its rapid expansion in the year's first quarter. The current account deficit in the first quarter mushroomed to nearly $200 billion. For an excellent article about this topic, see this link: http://www.grantspub.com/articles/stockjockeys/
Therefore, I believe the portfolio is well positioned for dollar vulnerability and/or domestic financial instability going forward. I do not find the stock market attractive, as government data indicate that labor is beginning to reap a larger share of the economic pie. If this trend continues, look for corporate profit growth to slow dramatically. Given that the dollar has continued its climb in the first two trading days of the second half, rebalancing (at least) in the Prudent Global Income Fund and the Price International Bond Fund is worth considering.
(Updated 7/5/2005)
MODEL PORTFOLIO 2004
General Comments
The stock market performed well in 2003, but the U.S. financial system continued to run out of control. The Fed reports that at the end of September, total nonfinancial debt (government, households, and business) had ballooned to 198% of GDP, from 192.2% a year earlier. The current account deficit for all of 2003 was about $526 billion, or nearly 5% of GDP, up from $464 billion in 2002. While it is unclear how much longer these excesses can be maintained, it seems wise to prepare for an eventual reckoning. A scenario that I find plausible is that the Fed will keep short-term interest rates low to try to preserve the ability of households and businesses to service their debts, and the dollar will continue to decline as the current account deficit remains high. The eventual result will likely be higher inflation and higher nominal (though probably not real) intermediate and long-term interest rates and a decline in stock and bond prices. This is a long-term forecast, and it is difficult to estimate when it will begin to unfold in earnest. It seems clear, though, that given a choice between a depressionary debt collapse and hyperinflation, the latter is more likely.
(Updated 2/6/2004)
Portfolio to Begin 2004
T. Rowe Price U.S. Treasury Money Fund 23%
Vanguard Inflation-Protected Securities Fund 12.5%
Fidelity Select Gold Fund 10%
Prudent Bear Fund 9.5%
Prudent Global Income Fund 9%
T. Rowe Price Short-Term Bond Fund 8%
T. Rowe Price International Stock Fund 7.5%
T. Rowe Price International Bond Fund 7%
T. Rowe Price Japan Fund 4%
T. Rowe Price Total Equity Market Index Fund 3.5%
Fidelity Select Environmental Fund 3.5%
T. Rowe Price New Asia Fund 2.5%
(Updated 1/5/2004)
Results for 2004
The portfolio rose 3.0% in 2004. The gainers were New Asia +18.6%, Japan +16.8%, International Stock +13.9%, Total Equity Market Index +12.2%, International Bond +11.4%, Inflation-Protected Securities +8.3%, Select Environmental +7.4%, Prudent Global Income +3.4%, Short-Term Bond +1.5%, and U.S. Treasury Money +0.74%. The declining segments were Select Gold -9.8% along with Prudent Bear -14.1%.
It was another lackluster year for the International Stock Fund -- compare its 13.9% return to Vanguard International Growth (+18.95%) or Vanguard International Value (+19.8%). The International Stock Fund again suffered from subpar stock performance and marginally higher fees.
The Select Environmental Fund, a speculative pick because it has lagged the overall market, obviously didn't pan out in 2004, as it continued to underperform. The loss in the Prudent Bear Fund was not unexpected given that the stock market performed well and gold stocks finished down for the year, even though the price of gold itself rose about 5%.
The Select Gold Fund slightly trailed the overall gold fund average -- compare its 9.8% loss to the average loss of 8.0%. Obviously it didn't pick up any ground after its bottom-of-the-heap showing in 2003. However, it does not appear that the current fund manager (who took over the fund in February 2003) is mostly to blame for the "lost year" of 2003. The portfolio was already in place, and the fund typically doesn't have a high turnover. It appears that the stocks simply underperformed, and a couple of strong performers such as Aber Diamond and Freeport-McMoRan were, in hindsight, sold too early. In short, it is probably too soon to judge the fund manager's performance, but no doubt the shareholders are hoping for a rebound in 2005. Also, it is difficult to refrain from comparing the two-year performance of the Select Gold Fund (up 19%) to the absolutely stellar return of the Vanguard Precious Metals & Mining Fund (up 72%). As I have stated before, the Vanguard Funds are, in my view, an excellent choice for new investors or those dissatisfied with their current funds.
(Updated 1/10/2005)
MODEL PORTFOLIO 2003
General Comments
I do not expect a return of rapid "economic growth" -- the foundation of which is the expansion of debt -- in 2003. However, massive "fiscal stimulus" (government red ink) along with "monetary stimulus" (low short-term interest rates) will probably avert a sharp downturn in economic activity. Low interest rates, a decline in the dollar during 2002, high oil prices and a more rapidly expanding money supply all point to the likelihood of gradually rising inflation. Although the dollar slipped by about 9% relative to other major currencies in 2002, I continue to believe that it is significantly overvalued. The stock market remains overpriced in my view, though it has become more attractive as stock prices have declined.
The model portfolio has undergone a few modest changes, the most significant of which is a small exposure to the U.S. stock market, with an eye toward increasing this allocation if stock prices sink further. Somewhat belatedly, I have also diversified to a greater degree outside of the United States.
The diversification of the portfolio may be unwieldy for many investors. If so, it is hoped that the portfolio may produce a few useful ideas for those investors.
Portfolio to Begin 2003
T. Rowe Price U.S. Treasury Money Fund 21%
Vanguard Inflation-Protected Securities Fund 15%
Fidelity Select Gold Fund 10%
Prudent Bear Fund 9%
T. Rowe Price International Stock Fund 9%
Prudent Safe Harbor Fund 8%
T. Rowe Price Short-Term Bond Fund 8%
T. Rowe Price Japan Fund 5%
T. Rowe Price International Bond Fund 4%
T. Rowe Price Total Equity Market Index Fund 4%
Fidelity Select Environmental Fund 4%
T. Rowe Price New Asia Fund 3%
(Updated 1/4/2003)
Results for 2003
The model portfolio posted a gain of 15.0% in 2003. The top performers were the New Asia Fund (+53.5%) and the Japan Fund (+44.1%). The Select Gold Fund gained 32.1% but was a major disappointment -- more on that later. The International Stock Fund rose 31.3% but it lagged the EAFE index and the performance of most funds in its category. Other gainers were the Total Equity Market Index Fund (+31.0%), the Select Environmental Fund (+29.0%), the International Bond Fund (+18.8%), the Prudent Global Income Fund (name changed from the Prudent Safe Harbor Fund, +16.3%), the Inflation-Protected Securities Fund (+8.0%), the Short-Term Bond Fund (+3.7%), and the U.S. Treasury Money Fund (+0.61%). The only loser was the Prudent Bear Fund (-10.4%) which is mostly long gold stocks and short other stock sectors. The fund performed reasonably well as rising gold stocks helped offset the strong performance of U.S. stocks generally.
As I mentioned previously, the Fidelity Select Gold Fund performed abysmally relative to its category. Its 32.1% gain ranked it last (46th) of the 46 gold-oriented funds for 2003 according to Lipper. The fund was apparently a victim of good old-fashioned bad stock picking. The average gain for the category was 59.0%.
It will be interesting to see how the fund managers react after the 2003 drubbing relative to other gold funds. History shows that to change strategies after a bad year is often not the wisest course. A few years back the Fidelity Global Bond Fund had a disastrous period in which it kept changing its hedging strategies and exposure to emerging market bonds at the wrong times. No doubt there is serious consternation at Fidelity over the fund's 2003 performance, but it is unclear whether the usual knee-jerk solution -- a new manager and a shift in holdings to more closely follow the relevant index (probably the XAU) is really in the best interest of shareholders. We will see what unfolds and holders of the fund hope they get it right.
One more note: If you are putting new money into mutual funds, I strongly suggest that you consider the no-load and low-fee funds of the Vanguard family. Compare the following 2003 results:
Vanguard Precious Metals Fund +59.45% vs. Fidelity Select Gold Fund +32.1%
Vanguard International Growth Fund +34.45% and Vanguard International Value Fund +41.9% vs. T. Rowe Price International Stock Fund +31.3%
Vanguard Short-Term Corporste Fund +4.2% vs. T. Rowe Price Short-Term Bond Fund +3.7%
Vanguard Inflation-Protected Securities Fund +8.0% vs. T. Rowe Price Inflation-Protected Bond Fund +7.6%
Vanguard Treasury Money Market Fund +0.82% vs. T. Rowe Price U.S. Treasury Money Fund +0.61%
However, it should be noted that the Vanguard Pacific Stock Index Fund (+38.4%) lagged both the Price New Asia Fund and the Japan Fund, and Vanguard has no international bond fund.
(Updated 2/6/2004)
MODEL PORTFOLIO 2002
General Comments
In 2001, the slowing economy caused corporate profits to tumble. The government attempted to goose the economy by cutting taxes and lowering interest rates. It remains to be seen how effective these measures will be in boosting economic growth. Although the stock market fell sharply when trading resumed after September 11, stocks have more than recouped those losses. Optimists hope for a strong economic rebound that will lift corporate profits and stock prices -- but not inflation -- in 2002.
My model portfolio is little changed from 2001. Despite the stock market's losses in 2001, I still see stocks as overpriced in light of diminished corporate profits. Gold stocks continue to look attractive. In my view, the US dollar is unsustainably high versus the other major currencies. In 2001 the dollar strengthened about 7% while U.S. short-term interest rates plummeted. A decline in the dollar would likely fuel a continued advance in gold stocks, and also cause inflation to rise. In light of the overvalued dollar, I recommend a diversification into other currencies, indicated by the small position in the Prudent Safe Harbor Fund (This fund also contains some gold stocks.). A case might be made for a larger position in this fund, and a smaller position in a money market fund. This year's recommended money market fund is a government-only fund for added safety, with only marginally lower yield.
I don't believe that now is a good time to abandon long-suffering international equities, so here I recommend an allocation that is nearly identical to the beginning of 2001.
For further background on the model portfolio, see the 2001 discussion below.
Portfolio To Begin 2002
Money Market Mutual Fund 41.5%*
(T. Rowe Price U.S. Treasury Money Fund)
Inflation-Indexed Treasury Fund 15%*
(Vanguard Inflation-Protected Securities Fund)
Gold/Precious Metals Stock Mutual Fund 12.5%
(Fidelity Select Gold Fund)
"Short" Mutual Fund 9.5%
(Prudent Bear Fund)
International Stock Mutual Fund 7%
(T. Rowe Price International Stock Fund)
Japanese Stock Mutual Fund 6%
(T. Rowe Price Japan Fund)
Non-U.S. Dollar Short-Term Income Fund 5%
(Prudent Safe Harbor Fund)
Pacific Ex-Japan Stock Mutual Fund 3.5%
(T. Rowe Price New Asia Fund)
(Updated 1/4/2002)
*Update
I recently became aware of a couple of mutual funds that invest in inflation-indexed Treasury securities (notes and bonds) -- these securities are designed to provide a specified return above the rate of inflation. The funds are the Vanguard Inflation-Protected Securities Fund and the American Century Inflation-Adjusted Bond Fund. I had not previously known of any funds of this type. I find these funds attractive because of the current low money-market yields and because I believe that there is a risk of rising inflation. Because it is near the beginning of the year, I have taken the liberty of revising the model portfolio by placing 15% in the Vanguard fund and reducing the money-market allocation. I will consider this change to have occurred at Friday's close (1/18), and will correct for the fractionally higher return of the Vanguard fund up to that date.
This change will probably have a small effect on the overall return of the portfolio, but it will be interesting to see whether it helps performance. Of course, a case might be made for allocating an even higher percentage to an inflation-protected mutual fund.
(1/21/2002)
Results for 2002
It was an excellent year for the model portfolio, which rose 15.8%. The top gainer was the Fidelity Select Gold Fund, which soared 64.3% (not load adjusted) on war fears and a falling dollar. Outstanding performances were turned in by the Prudent Bear Fund -- up 62.9% as the overall U.S. stock market fell but gold stocks rose -- and the Prudent Safe Harbor Fund (up 29.6%). Safe harbor indeed, at least for 2002. The Vanguard inflation-protected fund also roared ahead, gaining 16.6% (15.9% after Jan. 18). Negative returns were logged by the T. Rowe Price International Stock Fund (down 18.2%), Japan Fund (down 16.9%), and New Asia Fund (down 9.4%). The money market fund inched ahead by 1.34%.
The model portfolio outperformed those of all but one of the panelists on Louis Rukeyser's Wall Street. The S&P 500 index declined by 23.3% for the year.
(Updated 1/6/2003)
Previous Update -- April 2001
The analysis in the previous version (link at left) has already proven to be prescient with regard to the forecast of a greater than 50% decline in the Nasdaq. I continue to believe that stocks are overvalued because I expect economic difficulties to continue, which would depress corporate profits. At current levels, I think that the Dow (10013) and Nasdaq (1899) are about equally overpriced, and I expect further declines of 25% or more in these indices.
(4/12/2001)
MODEL PORTFOLIO 2001
General Comments
The model portfolio represents what I see as a desirable asset allocation for the beginning of 2001, for an "average" investor -- not particularly aggressive or conservative, in the middle (28%) tax bracket, who likes to keep things fairly simple. As the year progresses, the year-to-date return of the portfolio will be tallied. The return of each segment of the portfolio will be determined by using an appropriate mutual fund, indicated in parentheses. The distribution probably seems rather conservative; there are two reasons for this: 1) I believe that the U.S. stock market is overvalued and the debt-ridden U.S. financial system is on precarious ground; and 2) When a sustained market downturn occurs, I think that most investors will find that they have less tolerance for risk than they currently believe. I hope that you check back from time to time to see how things are going.
Portfolio To Begin 2001
Money Market Mutual Fund 60%
(T. Rowe Price Prime Reserve Fund)
Gold/Precious Metals & Minerals Mutual Fund 13%
(Fidelity Select Gold Fund)
"Short" Mutual Fund 11%
(Prudent Bear Fund)
International Stock Mutual Fund 7%
(T. Rowe Price International Stock Fund)
Japanese Stock Mutual Fund 5.5%
(T. Rowe Price Japan Fund)
Pacific-Ex Japan Stock Mutual Fund 3.5%
(T. Rowe Price New Asia Fund)
(Updated 1/4/2001)
Results for 2001
The model portfolio for 2001 posted a positive return of 2.75%. The not-so-good news is that this performance was slightly below most money market mutual funds. The good news is that this result surpassed 15 of the 22 panelists on Wall $treet Week with Louis Rukeyser, and of course avoided the negative returns of the major stock averages. The S&P 500 was down 11.85% for the year (total return), while the Nasdaq posted a loss of 20.8%. The average return of the panelists on Wall $treet Week with Louis Rukeyser was negative 12.15%.
The best performer in the model portfolio was the Fidelity Select Gold Fund, which gained 25.0% (not load adjusted). The Prudent Bear Fund rose 7.4% -- a modest return in a down year for the stock market. All three international equity segments posted double-digit losses, with the laggard again being the Japan Fund, down 32.25% for 2001.
(Updated 1/4/2002)
RESULTS FOR 2000
For 2000, the model portfolio posted a gain of 1.1%. This result was AHEAD of 17 of the 22 panelists on Wall $treet Week with Louis Rukeyser. The best performer by far was the Prudent Bear Fund, up 30.5%. All other non-money market segments posted double-digit losses, with the Japan Fund falling farthest, down 37.2%. The large money-market weighting added stability and helped to achieve a positive return.
(Updated 1/4/2001)
The model portfolios for 2000 and 2001 posted slightly positive returns. Many well-known market watchers have fared much worse. To see some unfortunate forecasts from ubiquitous pundits, check out the "Silly Quotes" link at the left.